Overview:
This session led by Alan Hughes, a specialist regulatory lawyer, considered the following questions:
- Do you have the correct people in SM positions - selection, election or conscription?
- Do you have the evidence to support decisions?
- Could this be the biggest catalyst for change in business models that we have seen in several years?
- How should you deal with Appointed Representative firms which are exempt from the legislation?
- How do you successfully implement a timetable for change and implementation?
Planning is key
With only five months to go until implementation of the SMCR – the Senior Managers and Certification Regime on 9th December 2019, planning should now be underway in regulated firms.
Alan explained that the following elements are important building blocks to ensure a firm is ready for 9th December 2019 and will comply with the new regulations:
- Mapping
This is the most important initial task for fall firms: how does your firm currently operate and what are the governance structures and processes? How well/easily does this map over to the SMCR? This will set the tone for the project and what will it look like.
- Who are your senior managers?
Most senior manager roles should fall easily out of the mapping process for core firms – those firms that fall below relevant thresholds. However, you also need to look at the reporting lines under each Senior Manager, depending on what they are responsible for and it is here that some changes may be required.
- Evidence
Record what you are doing in your implementation project to justify the approach taken – if it isn’t written down, it didn’t happen!
- How much change?
The SMCR is not intended to produce radical change in most firms in terms of how they operate and their business model. The FCA is not looking to try a make immediate change to and what they do. It is more about individuals taking more responsibility for what their firms do, and firms encouraging this culture of individual responsibility, which may indirectly result in some change to the governance of the firm itself.
- Appointed Representatives (ARs)
The regime does not apply directly to ARs, but firms with ARs do need to think about any changes that they may want to make to reflect how the SMCR applies to them. Supervision of ARs is already a focus for the FCA, what the SMCR will do is increase that focus and make individuals in the principal more accountable for it.
- Timetable
Alan Hughes provided a draft timeline document to take firms through to implementation and setting out some key steps that all firms should be thinking about. This is attached.
Additional points raised and discussed
- The need to keep accurate and complete records – compliance support firms are likely to provide support in this area and so intermediary firm should ask what documents are available. If none are available, several online systems are now being promoted which may be worth exploring.
- The role of Non-Executive Directors – NEDs, unless they are either Chairmen or responsible for compliance, are not a Senior Management Function (SMF) under the SMCR. Instead they are certified staff who will be self-certified by the firm and will not require FCA pre-approval or Statements of Responsibility.
Action is required now:
Alan concluded by re-iterating that work should have already started and that delay at this point was inadvisable given the relatively short space of time between now and 9th December 2019 to ensure that the requisite arrangements are in place.
Overview:
This session led by Alan Hughes, a specialist regulatory lawyer, considered the following questions:
- Do you have the correct people in SM positions - selection, election or conscription?
- Do you have the evidence to support decisions?
- Could this be the biggest catalyst for change in business models that we have seen in several years?
- How should you deal with Appointed Representative firms which are exempt from the legislation?
- How do you successfully implement a timetable for change and implementation?
Planning is key
With only five months to go until implementation of the SMCR – the Senior Managers and Certification Regime on 9th December 2019, planning should now be underway in regulated firms.
Alan explained that the following elements are important building blocks to ensure a firm is ready for 9th December 2019 and will comply with the new regulations:
- Mapping
This is the most important initial task for fall firms: how does your firm currently operate and what are the governance structures and processes? How well/easily does this map over to the SMCR? This will set the tone for the project and what will it look like.
- Who are your senior managers?
Most senior manager roles should fall easily out of the mapping process for core firms – those firms that fall below relevant thresholds. However, you also need to look at the reporting lines under each Senior Manager, depending on what they are responsible for and it is here that some changes may be required.
- Evidence
Record what you are doing in your implementation project to justify the approach taken – if it isn’t written down, it didn’t happen!
- How much change?
The SMCR is not intended to produce radical change in most firms in terms of how they operate and their business model. The FCA is not looking to try a make immediate change to and what they do. It is more about individuals taking more responsibility for what their firms do, and firms encouraging this culture of individual responsibility, which may indirectly result in some change to the governance of the firm itself.
- Appointed Representatives (ARs)
The regime does not apply directly to ARs, but firms with ARs do need to think about any changes that they may want to make to reflect how the SMCR applies to them. Supervision of ARs is already a focus for the FCA, what the SMCR will do is increase that focus and make individuals in the principal more accountable for it.
- Timetable
Alan Hughes provided a draft timeline document to take firms through to implementation and setting out some key steps that all firms should be thinking about. This is attached.
Additional points raised and discussed
- The need to keep accurate and complete records – compliance support firms are likely to provide support in this area and so intermediary firm should ask what documents are available. If none are available, several online systems are now being promoted which may be worth exploring.
- The role of Non-Executive Directors – NEDs, unless they are either Chairmen or responsible for compliance, are not a Senior Management Function (SMF) under the SMCR. Instead they are certified staff who will be self-certified by the firm and will not require FCA pre-approval or Statements of Responsibility.
Action is required now:
Alan concluded by re-iterating that work should have already started and that delay at this point was inadvisable given the relatively short space of time between now and 9th December 2019 to ensure that the requisite arrangements are in place.
Expert: Alan Hughes Foot Antsey LLP
