On 28 October 2020, the FCA published their Policy Statement on the Senior Managers & Certification Regime (SM&CR) for solo-regulated firms. Following on from the initial decision to extend of the implementation timeline to 31 March 2021, the Policy Statement formalised this via a Treasury statutory instrument. The delay now sees firms required to undertake the first assessment of Fitness & Propriety (F&P) by 31 March 2021 and corresponding deadlines for training staff in the Conduct Rules and for reporting Directory Person data.
Of interest were some of the areas of feedback by firms and the FCA’s response to these:
| Area of firm feedback |
FCA response |
| Importance of firms continuing to meet the 9 December 2020 deadline |
- We agree with respondents that most firms will not need to use this extension.
- We strongly encourage all firms able to complete certification assessments, Conduct Rules training and Directory Persons reporting sooner than 31 March 2021 to do so, provided they can do this without compromising the quality of their assessments or training.
- Firms must also still take prompt action to remove staff from any roles they are not fit and proper to carry out.
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| Importance of SM&CR |
- Effective implementation of the Certification Regime and the training of staff in the Conduct Rules are essential for delivering an enduring positive impact on capabilities and culture – and therefore reducing harm in the long term. It is precisely because the SM&CR is so important that we want to give firms the time they need to make lasting improvements to their conduct and culture.
- Extending the deadlines as we proposed means that firms will not have to choose between meeting their regulatory deadlines and realising their plans to achieve a full and effective implementation of the Certification Regime and Conduct Rules.
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| No delay in applying the Conduct Rules to staff in scope of the Certification Regime |
- Staff at solo-regulated firms in scope of the Certification Regime have been subject to the Conduct Rules from 9 December 2019.
- This means that they should have completed all necessary training before the UK went into lockdown and these staff are already subject to the Conduct Rules and are held accountable for any misconduct.
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| Keeping open the possibility of further action |
- We recognise that uncertainty persists around the timing and extent of such measures but, even with this, we consider this extension should give all firms enough time to implement the SM&CR. So, we will not make a further extension.
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| Meaning of a firm ‘significantly affected’ by Covid-19 |
- The amendment in legislation made by the Treasury applies unconditionally, so all firms can rely on this extension. We do not intend to set additional conditions or thresholds a firm needs to meet to use the extension.
- We would not act against any firm for relying on the additional time. Firms able to fully and properly implement the SM&CR requirements ahead of 31 March 2021 deadline, are still encouraged to do so.
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| Further information on the Financial Services Register |
- We acknowledge the desire for further information on the approach to submission and landing slots for solo-regulated firms. We have communicated this information to the relevant firms.
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As firms move into the last five months of delivery, the focus remains on ensuring that the Regime requirements are embedded within the whole infrastructure of the business, not just a paper trail skirting superficially across the top.
FourthLine has prepared an insights deck for firms that provides our perspectives on common challenges and pitfalls that our team have seen during previous implementation waves. Click to download our SMCR Insights Deck HERE.
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