The Financial Conduct Authority (FCA) has extended the senior managers and certification regime (SM&CR) to around 47,000 firms across financial services, giving firms a year in which to comply with the rules
The SM&CR already applies to the banking and insurance sectors and the FCA says the extension is a key step to creating a culture across financial services where individuals step forward and take accountability for their own actions and competence.
From 9 December SM&CR replaced the approved persons regime (APR) for solo-regulated firms, meaning the regulations now apply to almost all firms authorised under the Financial Services and Markets Act 2000 (FSMA)
Under the regime, senior managers are accountable for conduct in their areas of responsibility, while the FCA’s five conduct rules are designed to ensure a minimum standard of behaviour for everybody working in the sector.
Firms are required to certify that their staff are fit and proper, and to provide training in meeting the requirements.
Jonathan Davidson, the FCA’s executive director of supervision – retail and authorisations, said: ‘The culture and governance of firms is a priority for us and should be for industry too.
‘We expect firms to embed healthy cultures as this will lead to better outcomes for consumers and markets. It should lead to a healthy and fulfilling environment for employees in which diversity and inclusion is the norm. It should also lead to healthy and sustainable returns for businesses.
‘The SM&CR is an important way to ensure that individuals take personal responsibility and it is a catalyst for driving cultural transformation. It is about the principle of stepping up and taking accountability every day from here on, not just about ticking the box on implementation of the regime.’
By 9 December 2020 solo-regulated firms will need to ensure that all relevant staff are trained on the conduct rules and how they apply to their roles.
They will also need to ensure all staff in certified roles are fit and proper to perform that role and are issued with a certificate, and that they submit data to the FCA for the directory of key people working in financial services.
The FCA is warning this process will take time, so firms should start preparing now.
