Action list: Senior managers regime

The Senior Managers Regime (SMR) which has already been introduced for banks will be extended to all FCA solo-regulated firms. The “near-final” rules were published on 04 July 2018 and will apply to FCA solo-regulated firms from 09 December 2019.

This list summarises the steps which in-scope firms are likely to need to take in order to comply with the regime. To promote internal discussion and planning around these changes, this document summarises some of the steps which we anticipate will be required in relation to SMR.

Implementation of the SMR rules - action points:

  • Identify relevant business functions and business areas across all entities that are within the regime as relevant authorised persons.
  • Identify current SIF function holders of relevant entities and consider how they will be grandfathered over into new roles under the new regime. Confirm these are appropriate.
  • Identify territorial scope issues relating to the location of key personnel and teams.
  • Review current organisational charts and reporting lines for all affected entities to assist in analysis of which individuals will have overall responsibility for key functions by reporting to the Board and which individuals are senior but do not need to be approved as Senior Managers within the key business area function. In complex groups review reporting lines out of the UK or into the UK and to group entities.
  • If reporting lines and organisational charts are not fully up to date or detailed, update to ensure they reflect the status quo before overlaying the new SMR regime requirements.
  • Identify who will carry out FCA SMFs (without regard to structure of business).
  • Identify applicable responsibilities and functions for each Senior Manager.
  • Assess application of SMFs to business model.
  • Propose relevant re-organisation of structure to meet requirements in relation to allocation of responsibility, where necessary.
  • Consult and agree with individual employees on the relevant responsibilities.
  • (If necessary) restructure business areas reporting to Senior Managers in order to reach agreement in relation to Statements of Responsibilities.
  • Draft template Statements of Responsibilities for different Senior Managers, where possible based on existing job descriptions or any model statements provided by guidance from the regulators or elsewhere to comply with requirements.
  • Ensure Statements of Responsibilities take into account collective decision-making and delegation where appropriate.
  • Implement reorganisation and change of reporting lines as necessary.
  • Establish processes for recruitment of Senior Managers which ensure that fitness and propriety, training and other issues have been taken in to account in advance.
  • Establish processes for annual assessment of Senior Managers, including tendering for providers to provide IT/systems.
  • Possible recruitment to manage processes, including project management.
  • Educate Senior Managers on their responsibilities and processes and establishing processes for Senior Managers in relation to delegation.
  • Formulate plan for engagement with FCA in relation to approval process.
  • Draft forms for submission to FCA for approval.

For Enhanced Firms only:

  • Draw up one firm management responsibilities map. In complex groups ensure that this takes proper account of relationships with other group entities for business silos.
  • Ensure that there is a Senior Manager with responsibility for every activity, business area and management function in the firm.
  • Ensure Statement of Responsibilities fit together holistically across all Senior Managers as well as working at an individual level, ensuring that there are no gaps in or duplications of responsibilities.
  • Review and/or implement policy for handover procedures, setting out what information a new Senior Manager has to hand when replacing a predecessor. 

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.