The Financial Conduct Authority (FCA) is consulting on its proposals outlining how firms and individuals will convert to the senior managers and certification regime which aims to make individuals more accountable for their conduct in financial services
The 1,243-page consultation paper sets out how the FCA proposes to move relevant firms and individuals to the new senior managers and certification regime.
For the majority of FCA regulated firms, the regulator is proposing to automatically convert individuals from the Approved Persons Regime to the new regime. This means the majority of firms will not need to submit applications to convert approved persons to senior managers.
The FCA says that this means firms can instead focus on embedding the cultural changes that the new regime introduces and make sure their staff know what they need to do.
There are also plans to implement the rules for certification gradually so that firms can get used to applying the new regime. Once a year, firms will need to confirm that their certified staff are fit and proper for their roles. They will have to do this even if the individuals were in these roles before the certification regime comes into force, or were approved by the FCA under the approved persons regime.
The regulator is also consulting on extending the duty of responsibility to insurers and firms solely regulated by the FCA as at present it only applies to senior managers of banks.
Under the duty of responsibility senior managers are responsible and accountable for the areas they lead, meaning the FCA can take action against a senior manager where the firm has breached an FCA requirement in their part of the business.
The senior managers and certification regime build on initiatives which will help the regulator to identify and assess key senior individuals.
The date for implementation of the new regime will be set and announced by the Treasury in due course but the FCA has assumed that the rules will apply to insurers in late 2018 and solo-regulated firms in mid-to-late 2019.
Jonathan Davidson, executive director of supervision- retail and authorisations at the FCA, said: ‘Culture and governance in financial services and its impact on consumer outcomes is a priority for the FCA. Extending the senior managers and certification regime will drive forward culture change in financial services firms.
‘This next set of our proposals outline our plans for a smooth transition to the new regime, which is simple, clear and proportionate. Indeed, the vast majority of firms will not need to submit applications to convert existing approved persons to senior managers.’
The consultation closes on 21st February 2018 with the FCA aiming to finalise its approach in summer 2018.
Report by Amy Austin
