Financial Conduct Authority Updates on SM&CR

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On Friday 8 March, the Financial Conduct Authority (FCA) issued two important updates for
the implementation of the Senior Managers and Certification Regime (SM&CR):

Policy Statement (PS19/7) – The Directory

Finalised Guidance (FG19/2) – Senior Managers and Certification Regime: Guidance
on statements of responsibilities and Responsibilities Maps for FCA firms

The Directory

This Policy Statement (PS19/7) provides the final rules on the Directory of financial services
workers, which is a new public register that enables consumers, firms, and other
stakeholders to find information on key individuals working in financial services. Key
individuals are:

 All Directors and Managers who are not performing Senior Manager Functions
(SMFs) under the SM&CR;

 All staff certified as fit and proper by their firm;

 Other important individuals who undertake business with clients and require a
qualification to do so (e.g. sole traders or Appointed representatives).

Whilst the current Financial Services Register will remain in place following the extension of
the SM&CR, it will contain only individuals for specified Senior Manager roles who will have
been approved by the FCA. Table 1 at page 5 of the Policy Statement includes a list of
information to appear publicly in the Directory (such as the individual’s role, their workplace
location, and the types of business they are qualified to undertake).

The Directory aims to:
 make it more difficult for unsuitable individuals to operate in the UK market,

 help consumers to protect themselves from unauthorised individuals,

 help firms to understand the employment history of candidates when hiring, and

 to support the FCA, law enforcement, professional bodies, and other regulators in
monitoring the market, building intelligence, and targeting interventions.
The FCA has confirmed that the Directory will not make public any information on
remuneration or introduce a requirement for firms to explain why a member of staff has
been identified as a Material Risk Taker (also known as an MRT).
Firms are required to report timely and accurate information about their Directory persons
within 7 business days after a change has occurred, and to take all necessary action to
gather the required information and ensure its accuracy prior to submission.  

The Directory is expected to go live in March 2020. Banking firms and insurers will be able
to start submitting data on Directory individuals using the FCA’s Connect system or the
multi-entry facility in or about September 2019 (the FCA will communicate the exact date at
a later stage). All other firms will be able to start submitting data as of 9 December 2019
following application of the SM&CR to solo-regulated firms. As per SM&CR Prescribed
Responsibility, the relevant Senior Manager will be ultimately accountable for the
information provided on the Directory.

Statements of Responsibilities and Responsibility Maps

This Finalised Guidance (FG19/2) provides practical assistance and information to solo-
regulated firms when preparing their Statements of Responsibilities and Responsibilities
Maps, outlining some questions for firms to ask themselves, and examples of good and poor
practice. In short:

Statements of Responsibilities make it clear (for the FCA and for other firms) what a
Senior Manager is responsible and accountable for, under the ultimate
accountability of a firm’s governing body.

Responsibilities Maps provide an overview of how an “enhanced” firm is managed
and governed, a practical document that is clear and easy for regulators and people
who work for the firm to understand, and that contains key information about
governance bodies, senior management reporting lines and Senior Managers’
responsibilities.

FG19/2 is not binding on firms, and the FCA would not presume that a firm’s departure from
this Finalised Guidance is a breach of rules. As expected, the guidance should be applied in a
risk-based and proportionate way, and senior management should consider the size, nature
and complexity of the firm when deciding whether any self-assessment key questions or
whether an example of good or poor practice is appropriate to its business.

Readers of FG19/2 should keep in mind that certain contents are purely provided as
examples of how a Responsibilities Map could be constructed based on a fictitious firm, and
should not be interpreted as FCA guidance on how firms should organise their governance
or management arrangements.

Finally, in a separate document the FCA has published a summary of the feedback received
on GC18/4 – Senior Managers and Certification Regime: Proposed guidance on Statements of
Responsibilities and Responsibilities Maps for FCA firms.

To ensure you reach a fully compliant position in time and to understand how the
requirements apply to your firm, please do not hesitate to get in touch with us (on 02034
573 283 or by email at srb@objectivus.com), or visit our SM&CR dedicated webpage.

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