Senior Managers and Certification Regime: FCA reminds firms about the extension of the regime and encourages early preparation
Regulatory Updates | 16/04/19
The Financial Conduct Authority (FCA) is issuing a reminder to FSMA authorised firms that they need to start preparing today, to be ready for the new regime coming into effect on 9 December 2019. The FCA has already rolled out the SM&CR to banks and insurance firms, and is extending the regime to the 47,000 firms it regulates.
The aim of the SM&CR is to establish healthy cultures and effective governance in firms by encouraging greater individual accountability and establishing a new standard of personal conduct. Senior Managers will need to take responsibility not just for the decisions they make, but for how they influence others, encouraging a healthy culture from the top.
Under the regime, all Senior Managers must have a Statement of Responsibility – which should be clear enough for everyone to understand what activities the Senior Manager is responsible and accountable for in the business. Larger and more complicated firms are must have Responsibility Maps showing how the responsibilities of their Senior Managers fit together.
Firms are urged to prepare Statements of Responsibilities (SoRs) and Responsibilities Maps as early as possible. The FCA published guidance (https://www.fca.org.uk/publications/finalised-guidance/fg19-2-smcr-guidance-statements-responsibilities-and-responsibilities-maps in March to give firms practical assistance and information on preparing SoRs and Responsibilities Maps.
With the introduction of the SM&CR, the FCA is seeking to encourage a culture where all financial services staff embrace the new five conduct rules:
- Act with integrity
- Act with due care, skill and diligence
- Be open and cooperative with the FCA
- Pay due regard to the interests of customers and treat them fairly
- Observe proper standards of market conduct
Firms should start by preparing their bespoke training plans and ensure staff understand the practical application of the specific rules which are relevant to their roles. For bespoke training, firms can look to the FCA handbook: https://www.handbook.fca.org.uk/handbook/COCON/4/1.html
The culture and governance of firms is an ongoing priority for the FCA and the extension of the SM&CR is one element of this. To find out more about the full requirements firms should refer to the FCA’s guide for solo-regulated firms at the FCA website
Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the FCA, said: “Senior leaders should view the regime as a catalyst to inspire positive culture change at their firms. The SM&CR is an important way to ensure that individuals at all levels within firms take personal responsibility for their actions. It is good for business when employees buy into a firm’s purpose, feel personal accountability and are inspired to speak up (and to listen). This can be encouraged through the new conduct rules. This kind of culture supports a healthy and inclusive workplace for employees, innovation and sustainability, and thoughtful identification and mitigation of risk.”
