SM&CR – a quick guide

For those with time to spare, there has been no shortage of information published on the subject of the Senior Managers and Certification Regime (SM&CR) – FCA Consultation Papers, Policy Statements and Guides, ‘expert’ articles in the trade press, even a few articles published by ATEB here!

The extension of SM&CR to all FCA solo-regulated firms takes effect on 9 December 2019. Time enough to think about it you might feel … but there is a fair bit of preparation that firms need to get in place before December so firms really need to get their heads around the topic pretty soon.

ATEB has created a suite of guides, tools and templates (including a Conduct Rules Training pack) to help firms to prepare for and implement SM&CR. However, firms will still need to gain a degree of familiarisation with the requirements of SM&CR, so, for those of you with rather less time to spare, here is a quick guide to the key steps.

 

Preparing for SM&CR – by 9 December 2019

  • The FCA will contact firms to confirm their belief of the firm’s category (Limited Scope, Core or Enhanced). Firms should make their own assessment and if they disagree with FCA assessment then the FCA should be notified. Most firms will be CORE.
  • All individuals who are currently in a ‘senior manager’ controlled function and whose role and responsibilities will remain the same in SM&CR will be automatically converted to the Senior Management Function (SMF) without any further action required. (Except if one of the current roles is’Chair’.)
  • Individuals whose SMF role will change or who is newly appointed as at 9 December 2019 and not yet approved – approval will have to be applied for.
  • Each Senior Manager will need to have a Statement of Responsibilities.
  • Firms will need to IDENTIFY all individuals that are/will be performing a Certificated Function by 9 December 2019.
  • Individuals in a Certificated Function role must be assessed as fit and proper and issued with a certificate by 9 December 2020 but firms can decide to do that during 2019 if they wish – optional.
  • Firms will need to implement Conduct Rules training by 9 December 2019 for all individuals in a Senior Management Function or a Certificated Function.
  • Firms will need to review all related processes to ensure they meet the requirements of SM&CR including, but not limited to:
    • HR processes including Data Protection considerations for obtaining candidate’s/employee’s personal data
    • Recruitment
    • References
    • Disciplinary
    • Contract wordings (should include wording about meeting SM&CR requirements and Conduct Rules if not already covered by a catch all ‘meeting FCA requirements’ wording)

 

Preparing for SM&CR – by 9 December 2020

  • Individuals in a Certificated Function role must be assessed as fit and proper and issued with a certificate by 9 December 2020
  • Implement Conduct Rules for all staff (other than ‘ancillary staff’)
  • SM&CR processes must be applied to all new staff as appropriate following 9 December 2019 and on a continuing basis thereafter. This will include:
    • Application to FCA for approval of any new Senior Manager (or any Senior Manager whose role and responsibilities change);
    • Assessment by the firm of any new Certificated individual;
    • Conduct Rules training for all staff.

 

Ongoing implementation – post 9 December 2020

  • Individuals in a Senior Management Function role must be assessed as fit and proper at least annually;
  • Individuals in a Certificated Function role must be assessed as fit and proper and issued with a certificate at least annually;
  • New hires/promotions to a Senior Management Function or a Certificated Function must be subject to all SM&CR requirements;
  • Changes to responsibilities of a Senior Manager must be reflected in an amended Statement of Responsibilities. All historical SoRs should be retained.
  • Breaches of Conduct Rules will be subject to disciplinary investigation and, if upheld, must be notified to the FCA.

 

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Lots of work to be done and the deadline looms ever closer. Don’t leave it too late.

Action Required By You

  • Read ATEB’s other articles on ATEB here;
  • Speak to your usual ATEB Consultant or contact ATEB here.
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About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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