Making Compliance Work: New FCA SMCR Directory Consultation

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approved persons regime and senior managers regime 2018

Current Situation

Following the extension of the Senior Managers Regime 2018 (SMCR), the change from the FCA Approved Persons Regimes (APER), the number of individuals on the Financial Services Register (“FCA Register”) will drastically reduce, as only specified Senior Manager roles at FSMA firms will be required to be approved by the FCA and appear on the Register. Firms will in future, be in charge of certifying the suitability, skills, fitness and propriety of their own people to the FCA.

Throughout the consultation process for the SMCR extension, a variety of firms expressed issues about the absence of an FCA register for those individuals who are no longer required to be approved by the FCA (and in connection with whom there would be no FCA mark of approval). In response to these worries, the FCA is proposing a new Directory of facts to be supplied by firms. However, the FCA has not reversed the fundamental concept that it is no longer required to grant approval.

On 4th July 2018, the FCA released their “near final rules” and their senior managers regime guide as well as the consultation for the new “Directory”

Whether the Directory meets those issues is a question for the consultation process, do firms think that this Directory will have any value to the market?gdpr uk financial services fca

The FCA believes the improved visibility of firms and individuals would:

  • assist consumers to locate appropriate advisers or check the qualifications and conduct history of their existing adviser, thus increasing competition and improving consumer protection
  • allow firms to determine the suitability of counterparties, and
  • aid the FCA with monitoring and enforcement activities, making it more difficult for unsuitable individuals to operate in the UK financial market.

What do the FCA propose?

The FCA proposes to introduce the Directory: a new public register and user interface that will make details public on additional individuals conducting a wider variety of roles (including Certification staff, non-Senior Manager Function Directors (executive and non-executive) and those who the FCA does not approve, for example, financial advisers, pensions and mortgage advisers, traders, portfolio managers and additional managers), and also presenting information on the Senior Managers that the FCA continues to approve.

The Directory would include information such as:

  • Workplace location: list of individuals active in specific areas
  • Qualifications: list of individuals who hold appropriate qualifications e.g. to provide financial or pensions advice
  • Regulatory sanctions and prohibitions: facility to check which individuals are prohibited by the FCA and PRA or have limits on any activities they are authorised to undertake

What do you need to do?

  • Provide insightful feedback: The deadline is 5th October 2018 to provide the FCA with feedback on this proposal. The FCA aims to publish final rules in the winter. Final system testing would then occur before the FCA would accept notifications from firms.
    If the FCA introduces the Directory:
  • Provide relevant information: firms would have to provide the FCA with the information detailed above on all Directory Persons who work on their account, by the end of an individual’s first business day performing a relevant role. For existing staff, firms would have until completion of the SMCR transition period to certify relevant employees and report to the FCA accordingly.
  • Update of information: firms would be accountable for the timely and accurate reporting of this particular information on an ongoing basis (with a ₤250 administrative fee for late or inaccurate data; effectively a fine).

important please read

Compliance Consultant specialise in UK Regulatory Financial Services Governance and can assist your firm in the preparations for the SM&CR. Just search Google for “Compliance Consultants, London” and look for our tag on Google Maps (we’re usually #1).

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