Unless you have been out of the country for several months, you will be aware that the SM&CR is having its final roll out on 9 December 2019.
Firms should by now have been advised by the FCA of which firm type they are considered to be – Enhanced, Core or Limited Scope. Most firms will be Core. It is important that you contact the FCA if you have not yet heard from them or if you believe the firm type they have allocated is incorrect.
By 9 December 2019 Enhanced and Core firms must have:
- Identified all Certification Staff;
- Trained all Senior Managers and Certification staff on the Conduct Rules;
- Created systems and controls to ensure the firm will comply with the requirements of SM&CR.
Unless there is a change of role or the Chair SMF is involved, most currently approved individuals in Core firms will be converted to the new SMF automatically.
However, enhanced firms will need to submit conversion notification (Form K) for Senior Managers via Connect.
The deadline for submission is 23:59 on 24 November 2019.
As part of the Form K notification, firms will be able to upload their Responsibilities Map and completed Statements of Responsibilities for all Approved Persons who will be converted to Senior Management Functions (SMFs) at commencement of the regime.
If a firm does not have access to Connect, it will need to register. Failure to submit the relevant Form K(s), may put the firm in breach of regulatory requirements. If the firm has already submitted the required Form K(s), no further action is required on Connect.
Sole traders are Limited Scope firms. The only Senior Management Functions (SMFs) that normally can apply are SMF29 (the Limited Scope Function) and SMF16 (the Compliance Oversight function). If a sole trader doesn’t have employees, only the SMF16 Compliance Oversight function will apply. This function is only required if other rules require it or, in the case of CMCs, where the firm’s annual total income is £1 million or above.
A few sole traders with employees may have a governance structure. In this case, the same SMFs apply as for firms in the Core category.
The Certification Regime does not apply to a sole trader as an individual but may apply to their employees. So, the Certification Regime does not apply to a sole trader with no employees.
Most sole traders will not need to conduct a fit and proper assessment on themselves. This is because neither the governing SMFs nor the Certification Regime apply to a sole trader themselves, though these functions can apply to their employees.
Sole traders won’t need to get references about themselves from previous employers to perform a Senior Management Function as the sole trader. Firms do not need to request a regulatory reference for a candidate if they were previously a sole trader.
Sole traders do not need to conduct criminal records checks on themselves.
The Conduct Rules do not apply to a sole trader as an individual unless they hold an SMF. The Conduct Rules will apply to employees of sole traders (unless they perform one of the excluded ancillary roles).