March 2018
By Mark Greenwood, group regulatory policy manager, SimplyBiz
You are probably aware that the FCA is consulting on the extension of the Senior Managers and Certification Regime (SM&CR) to all FCA-regulated firms.
The key to implementing the SM&CR to all firms is proportionality. This means the same rules that
apply to banks should not apply in the same way to consumer credit firms.
The FCA issued a further consultation paper (CP17/40) that focuses on how they will move firms and their senior staff over to the new the regime. The FCA is calling this process ‘conversion’, and their aim is to make it simple, clear and proportionate.
When it comes to senior managers, the FCA rules will define which roles are senior management functions (SMF) depending on the type of firm involved.
The FCA is proposing the following SMFs for all firms:
Governing functions
SMF9 - chair (non-executive)
SMF1 - chief executive
SMF3 - executive director
SMF27 - partner
Only the functions that are relevant to the firm need to be applied for (similar to the existing Approved Persons regime).
Required functions
SMF16 - compliance oversight
SMF17 - money laundering reporting officer
SMF29 - limited scope function
Many firms will not need to apply all of these SMFs (this is the same as under the approved persons regime). So, for example, a limited permission consumer credit firm will only have one applicable SMF and a sole trader will not need to apply any governing functions.
Limited permission consumer credit firms
Under the new regime, a senior individual will need to hold the SMF29 - limited scope function (this is the same as the CF8 Apportionment and Oversight Function under the approved persons regime).
Full permission consumer credit firms
If your firm is involved in debt management, such as refinancing buy-to-lets, a senior individual will need to hold the SMF16 - compliance oversight function. In the current regime, this is CF10.
If your firm is a lender, a senior individual will need to hold the SMF17 - money laundering reporting officer function. In the current regime this is CF11.
The consultation paper confirms that for the majority of firms, the FCA is planning to automatically convert Approved Persons regime approvals to senior management functions. This means that if you are approved by the FCA for a function and the equivalent role exists in the senior managers regime, you do not need to apply for re-approval.
On publication of the policy statement in the summer of 2018, we will set out the full range of obligations firms must adopt. In doing this we will publish a range of template documents on our website that can be personalised to reflect these requirements.
The consultation paper assumes that the rules will apply to all FCA-regulated firms in mid- to late 2019.
If you have any questions, please contact the FIBA team on 0207 033 8899 or email enquiries@fiba.org.uk.