Making Compliance Work: Impending Actions List For Senior Managers Regime 2018

senior managers regime summary

Impending Actions list: Senior Managers Regime 2018

Senior Managers Regime 2018, senior managers regime summary

It is proposed that the FCA Senior Managers & Certification Regime (SMCR) which was previously introduced for banks will be extended to all FCA solo-regulated companies. The near final rules have been published by the FCA, and relate to FCA solo-regulated firms commencing on 9 December 2019. This means that firms have just under 18 months to prepare for the new regime.

Substantially different from the Approved Persons Regime, the Senior Managers Regime 2018 requires a lot of preparatory work to be done, starting now. The amount of work is likely to involve not only compliance (see post here as to why advisers shouldn’t be compliance managers) but also HR, Operations and all Senior Management. The list below is not exhaustive but provides a headline path of what is needed to comply with the new rules, subject to finalisation in around 6 months.

This post provides a senior managers regime summary and the steps which core and limited scope and enhanced firms are likely to have to take in order to satisfy the regime. To promote internal discussion and planning around these changes, we summarise a number of the steps which will be required in regard to SMCR.

Implementation of the SMCR rules – your action points:senior managers regime summary

  • Identify appropriate business functions and business areas across all entities that are within the regime as relevant authorised persons.
  • Identify current Significant Influence Function (SIF) holders of relevant entities and consider how they will be grandfathered over into new roles under the new regime. Confirm these are suitable.
  • Identify any territorial scope issues relating to the location of key personnel and teams.
  • Review current organisational charts and reporting lines for all impacted entities to support in analysis which individuals will have total responsibility for key functions by reporting to the Board and which individuals are senior but do not need to be approved as
  • Senior Managers within the key business area function. In complex groups review reporting lines out of the UK or into the UK and to group entities. Roles that have dual responsibility actually carry 100% responsibility each.
  • If reporting lines and organisational charts are not fully up to date or detailed, update to ensure they reflect the present state of affairs before overlaying the new SMCR regime requirements.
  • Identify who will execute FCA SMFs (regardless of structure of business).

  • Identify applicable responsibilities and functions for each Senior Manager.
  • Assess and map application of SMFs to business model.
  • Propose relevant re-organisation of structure to meet requirements relative to allocation of responsibility, where required.
  • Consult and agree with individual employees on the relevant responsibilities,(If necessary) restructure business areas reporting to Senior Managers so as to reach agreement in regard to Statements of Responsibilities.
  • Draft template Statements of Responsibilities for different Senior Managers, where possible based upon existing job descriptions or any model statements provided by guidance from the regulators or elsewhere to comply with requirements.
  • Ensure Statements of Responsibilities take into consideration collective decision-making and delegation where appropriate.
  • Implement reorganisation and change of reporting lines as necessary.
  • Establish processes for recruitment of Senior Managers which ensure that fitness and propriety, training and other issues have been taken into account in advance.
  • Establish processes for annual assessment of Senior Managers.
  • Possible recruitment for flexible, multi-availability with capacity, temporary compliance consultants to manage processes, including project management.
  • Educate Senior Managers on their responsibilities and processes and establishing processes for Senior Managers in relation to delegation.
  • Formulate plan for engagement with FCA in relation to approval process.
  • Draft forms for submission to FCA for approval.

For Enhanced Firms only:

  • Prepare firm management responsibilities map. In complex groups ensure that this takes proper account of relationships with other group entities for business silos.
  • Ensure that there is a Senior Manager with responsibility for every single activity, business area and management function in the firm.
  • Ensure Statement of Responsibilities fit together holistically across all Senior Managers and also operating at an individual level, making certain that there are no gaps in or duplications of responsibilities.
  • Review and/or implement policy for handover procedures, setting out what information a new Senior Manager has to hand when replacing a predecessor.

If you are a UK authorised firm, Compliance Consultant specialise in UK Regulatory Financial Services Governance Risk & Compliance, 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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