Complying with New Regulation
In a sector that is frequently inundated with regulatory updates, it’s easy to get yourself lost amongst the white noise. The main thing is to make sure that we don’t stay lost.
There are so many resources around now to help keep your head above water. Everyone goes through the same struggles – reading the legislation, trying to understand its purpose, what it is asking you to do and figuring out how to implement the necessary changes. It can all get a little confusing.
Just like MiFID II and GDPR (but thankfully a lot less confusing this time), the Senior Managers & Certification Regime (SM&CR), is going to bring about some serious changes in how firms are run and for the individuals who hold certain roles. It’s important that we stay on the right track to ensure it is done correctly. SM&CR has to be one of the clearest pieces of legislation in terms of what needs to be done. It is nothing like MiFID II and GDPR (you can breathe a sigh of relief).
Much like helpful forums – we’ve tried our best to put together two helpful checklists. What needs to be completed before the deadline (9th December 2019) and what needs to be completed afterwards. Hopefully, this will help to keep you on the right track with SM&CR… after all, it’s less than two months away, eek!
Before the 9th of December 2019…
- Stop, breathe and don’t panic – You have time. It is one of the easiest pieces of legislation to implement. However, if you are an enhanced firm and you are yet to start, then I would maybe start to panic, as there will be a lot of work for you. Thankfully, a lot of you won’t be considered an enhanced firm.
- Establish which regime you fall under – This will help you in knowing what your responsibilities are when implementing the regulation. To find out what regime you fall under, check out the FCA’s online firm type checker tool here.
- Create a timeline – Even though we are getting closer to the deadline now, having a timeline will enable you to see how much work needs to be done, and by when. It will also help you identify what work needs to be completed on an annual basis.
- Split the tasks into three separate segments – Senior Managers, Conduct Rules and Certification Regime. This will make the workload easier to manage.
- Establish who will hold Senior Manager Functions and identify what their prescribed responsibilities are.
- Carry out criminal record checks – This only applies to those who have not previously held a Certified Function. You can choose to carry one out on every individual if you like, but it only needs to be done at this point on newly appointed Senior Managers.
- Create a Statement of Responsibilities for your Senior Managers – This will need to be in written form and kept on file. These do not need to change in any specific period, such as annually, but if the individual holding the Senior Management Function changes, then you will need to alter them accordingly.
- Notify the FCA of any changes to role holders – For example, if an individual holds the CF10 role currently and they are not continuing in the role, then you need to notify the FCA of this, along with whom will be taking over the role. If the role holder is continuing then you do not need to do anything as they will grandfather over.
- Training on the new Conduct Rules – Both Senior Managers and Certification staff need to have received training on, and comply with, the Conduct Rules.
- Change job descriptions and contracts – You may need to amend the job descriptions you have given and the contracts you have with your staff, to reflect the new responsibilities they will have.
From then on…
- Fit and proper assessments – This should include looking at honesty, integrity & reputation, competence & capability and financial soundness. Make sure you have a plan in place for who is going to be responsible for making sure these are completed annually, who will carry them out and at what time of the year.
- Criminal record checks – Under SM&CR once a criminal record check has been completed, it does not need to be done again. However, as the check is only accurate at the time it was carried out, we would suggest completing these checks every 1-2 years and if the roles of the individual change.
- Conduct Rule training – Now all members of staff need to have received training. Have you decided who will be carrying out the training and when this will be completed each year?
- Regulatory references – These need to be requested for any new joiner who becomes a Senior Manager or holds a Certification function after the 9th December.
We hope this helps towards your SM&CR preparations – if you have any questions please do not hesitate to get in touch!
Hannah Scott – Junior Compliance Support