The impact of the current health emergency is constantly changing and, in line with all businesses, financial firms should be following the regular updates from the Government on the general health situation and guidance and should also be aware of the latest guidance for employees, employers and businesses published by the Government. Specific guidance from the FCA is also of immediate relevance and can be viewed in various places on the FCA website. Currently, the best starting point is the home page.
On 3 April, the FCA published its latest guidance in relation to its expectations and position around SM&CR in light of the coronavirus. We summarise the key points below.
- Senior Managers should consider for their areas of responsibility:
– where the current situation might lead to emerging risks;
– how it affects existing risks;
– the controls used to manage them;
- The FCA does not require firms to have a single senior manager responsible for their coronavirus response. Firms should allocate these responsibilities in the way which best enables them to manage the risks they face;
- Firms should be aware of and implement Government and FCA guidance on key workers and work related travel. See here. The FCA recommends that the SMF1, or most relevant member of the senior management team, be responsible for the firm’s approach to key workers;
- Individuals performing a Senior Management Function can generally be considered to be key workers;
- Senior Managers (SM) can be furloughed under the Government’s job retention scheme, subject to a few conditions;
- Such furloughed SMs will not need to be re-approved when they return;
- Any continuing or prescribed responsibilities held by the furloughed SM will need to be reallocated to another individual and these should be clearly documented and communicated internally, so that everyone understands who is responsible for what;
- It is not necessary to send updated statements of responsibilities to the FCA for these temporary changes;
- The compliance function (SMF16) and money laundering function (SMF17) should only be furloughed as a last resort;
- The 12-week rule permitting an individual to cover for a Senior Manager without being approved, where the absence is temporary or reasonably unforeseen, is relaxed. Where temporary arrangements last longer than 12-weeks as a result of the crisis, firms can notify the FCA that they consent to a modification of the rule and the temporary arrangements can be extended up to 36 weeks. Firms must clearly document these responsibilities, however temporary, including on relevant Statements of Responsibilities.