FCA Publishes Proposed Rules to Extend Senior Manager & Certification Regime to All Financial Services Firms

July 31, 2017

The UK’s Financial Conduct Authority (FCA) has published proposed rules to extend the senior manager & certification regime (SMCR) to all financial services firms.
In the extension to SMCR, the FCA proposes to apply principles consistent with the existing SMCR for banks but in a three tier regime under which the rules are applied in a manner which is proportionate to the size and business model of the firms in each tier.

The current SMCR model for banking firms will apply only to “enhanced SMCR firms,” (for example, asset managers with assets under management of at least £50 billion). Other firms will be subject to a lighter, less prescriptive regime.

The extension of SMCR also extends the “certification regime” under which individual firms and their senior managers (rather than the FCA) will be responsible for assessing and certifying the fitness and propriety of individuals carrying out a “certification” function on an ongoing basis. This is proposed to cover individuals presently registered under the approved person customer function as well as several other categories, including anyone who may be a material risk taker for the purposes of the FCA Remuneration Code.

New conduct rules, based on those which are currently applicable to banking firms, will apply to all firms and all of their staff except ancillary staff who do not perform a financial services role (such as receptionists, cleaners, HR administrators etc.). These rules will be directly enforceable and firms will be responsible for ensuring that staff are trained on them.

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