The Senior Managers and Certification Regime (SMCR) deadline of 9 December 2019 will not bring with it an army of White Walkers, but will herald a similarly daunting army of consultants anticipating significant advisory fees.
Set to replace the UK Approved Persons Regime (APR), the SMCR places greater emphasis and focus on senior managers and individual responsibility. It aims to reduce harm to consumers and strengthen market integrity by imposing a duty of responsibility on senior managers and making individuals more accountable for their conduct and competence.
The regime has been in force for banks, building societies and credit unions since March 2016 and will extend to cover all FCA solo-regulated services firms from 9 December this year.
Under the regime, a ‘statement of responsibilities’ must be provided to the FCA for every senior manager, outlining their responsibilities and accountabilities. FCA approval is needed before these senior managers can carry out their roles. Firms will additionally be required to certify at least on an annual basis that all individuals in “significant harm” functions are fit and proper. They must also ensure staff are trained on the accompanying Conduct Rules, and notify the FCA if a breach occurs.
Firms have a duty of responsibility to take the necessary steps to comply with the new regime, ensuring changes are implemented and breaches avoided. They will need to put time into designing systems and processes (including effective training) to implement all three aspects of the regime. An assessment of the firm will need to be conducted to consider whether it is necessary to make changes to its structure to align with the regime.
Know how, know you: IQ-EQ’s SMCR Toolkit
At IQ-EQ, many of our clients are boutique investment managers and advisory firms subject to the lighter touch ‘core’ regime, and the FCA has provided extensive practical guidance for such organisations. We are therefore offering our clients a free tailored SMCR Core Firm Toolkit based on public information in the FCA register that will significantly reduce implementation costs.
This Toolkit will reduce the amount of time spent on the necessary administrative changes and allow our clients to focus on the more substantive governance issues. With the right support, SMCR provides a great opportunity to review and assess governance structures, allocation of responsibilities and assessment processes in order to improve organisational effectiveness and increase control over operational risk.
Our complete SMCR Toolkit is available to all new and existing clients of IQ-EQ. We’re also offering the first part, the Implementation Plan, for free download. Click here to find out more and download our Implementation Plan template today.