May 2019
Following on from last month’s article, which focused on sole traders and how SM&CR will affect this type of firm, I thought that it would be a good opportunity to build upon this information and highlight another important requirement for the 9th December 2019 transition date. This is the requirement for all your firm’s Senior Managers and Certified Persons to be aware of and have been trained on, the new Code of Conduct rules that will apply specifically to their roles before the implementation of the new regime.
Under the regime, each Senior Manager will be allocated a Statement of Responsibilities, Prescribed Responsibilities (please note, this is not relevant for sole traders) and a Duty of Responsibilities.
There are five prescribed responsibilities listed in the FCA Handbook, and each (where relevant) must be allocated to a Senior Manager and be included within their Statement of Responsibilities.
A Statement of Responsibility is a single document held by each Senior Manager and sets out what they are responsible and accountable for and, while this will be FCA led, it will always be specific to your firm.
A Senior Manager’s Duty of Responsibilities is to prevent or report breaches in their area of responsibility.
For Senior Managers and Certified Persons within the firm at the start of the regime, the firm must assess and demonstrate their Fitness and Propriety before 9th December 2020, and annually thereafter.
This will include an assessment of:
For advisers, demonstrating competence under Fitness and Propriety will mean that the firm must continue to hold evidence of knowledge and skills through testing, file reviews, skills assessments, ongoing CPD and key performance indicators, to name just a few of the critical areas.
All advisers within every authorised firm will need to familiarise themselves with the new code of conduct rules before implementation. As you may be aware, these high-level principles are not too dissimilar to the current principles for approved persons, but all advisers must evidence they have received training on these.
It will also be sensible for advisers to review their T&C records. Fit and Properness is a central focus of the new regime, and part of this is to ensure the relevant competence requirements are met. This will bring in an even greater emphasis on a firm and adviser’s programme and evidence of competency.
Ensuring T&C meets current standards will mean different actions for different firms, but all firms should be reviewing this, even those that consider all current standards are met and evidenced.
We still expect further guidance to be published by the regulator in the lead up to the new regime, so once again, I would recommend that you check on the guidance provided by your compliance service provider to make sure you are on the right track and you are fully aware of all of your responsibilities. Preparation will be key to ensuring a smooth transition over to this new regime.
For further information about SM&CR, please contact the FIBA team about compliance services on 0330 002 0987