News Story

Regime change afoot for FCA-regulated firms

Release Date: 
30/10/2017

The Financial Conduct Authority (FCA) is tightening up its rules, replacing the current Approved Persons Regime with the Senior Managers and Certification Regime (SM&CR). The regime has already been operating in the banking sector for some time and will next year extend to the financial services sector.

This change will affect all FCA-regulated firms including non-UK firms with permission to carry out regulated activities in the UK, and it will focus on three key areas:

1. The Senior Managers Regime
2. The Certification Regime
3. Conduct Rules

The proposed Senior Managers Regime will require ‘senior managers’ to be FCA approved before starting their role. The FCA will set out which roles and functions are considered as ‘senior management’. Every ‘senior manager’ will be required to have a ‘statement of responsibilities’ making clear their individual responsibilities and accountabilities. Once a year firms will need to certify that ‘senior managers’ are suitable to do their job.

The proposed Certification Regime will apply to employees who are not considered to be ‘senior managers’ but whose role means that it is possible for them to do significant harm to the firm or its customers. These roles are called ‘certification functions’ and the FCA will set out which roles and functions fall into this category. Although the FCA will not need to approve these individuals, companies will have a responsibility to certify a person’s suitability to their role once a year.

The proposed Conduct Rules will apply to almost all employees who do financial services activities. Its intention is to drive up standards of individual behaviour and to set out what is expected from those working in the industry. It aims to improve individual accountability and awareness of conduct issues across firms.

The Treasury will set the timetable for the implementation of the new regime and a policy statement is scheduled for Summer 2018.

To support members with preparations for SM&CR, the BVRLA will be providing a series of updates, resources and learning programmes in 2018. To find out more, contact BVRLA Learning & Development Professional Duncan McMillan.

The BVRLA Inspection Programme will start to include assessment of compliance to SM&CR once it launches next year. Any questions on this can be directed to BVRLA Compliance & Governance Executive, Adam Holt.