The Senior Managers Regime applies to all individuals exercising a senior management function (SMF). A new set of Conduct Rules will apply to virtually all individuals within a firm. And we will seek to join forces with those who share our commitment—other members of the legal community; advocacy, professional and other allied organizations; and our clients—to maximize our impact.The “core regime” consists of three main elements: Senior Managers Regime; Certification Regime; and Conduct Rules.The SMCR will apply to all UK non-bank firms authorised by the FCA. The Certification Regime Such roles are known as “certification functions” and whilst such role holders do not need to be approved by the FCA, as the Senior Manager roles do, but the firms that appoint them need to check and certify that they are fit and proper to perform their role and this should be done at least once a year. Only enhanced firms will be subject to the "overall responsibility" requirement, meaning that they will need to ensure that every activity, business area, and management function has a senior manager with overall responsibility for it.
We will take our long history of pro bono representation and ensure that we are using the talent and passion of our firm to directly address racial injustice. As such, each firm must identify who that person will be. In these times of profound reflection, we recognize that progress is not enough, and there is much work to be done. The Prescribed Responsibilities include the performance by the firm of its obligations under the Senior Managers Regime, including implementation and oversight, the performance by the firm of its obligations under the Certification Regime, the performance by the firm of its obligations in respect of notifications and training of the Conduct Rules and the responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime.The Conduct Rules are enforceable by the FCA against individuals. This resulted in the creation of a new Senior Managers and Certification Regime (SM&CR). There are two tiers of rules, one that applies to all individuals and a second tier that applies only to senior managers.
Firms will be required to assign each of the Prescribed Responsibilities to a Senior Manager. Unlike senior managers, employees performing certification functions will not be subject to FCA approval and firms will instead be responsible for the annual assessment and certification of their fitness and propriety. If you have any questions about the matters addressed in this alert, please contact the following Akin Gump authors or your regular contact at Akin Gump.The Certification Regime will apply to employees who are not Senior Managers, but whose role means that it is possible for them to cause significant harm to the firm or its customers. Going forward, it is the firm’s responsibility to certify individuals carrying out a CF. A certificate is only valid for a maximum of 12 months from the date of issue, so firms will also have to reassess the fitness and propriety of all their Certification Function staff on an annual basis. However, the proportional implementation of the SMCR means that no other Non-Executive Director (NED) is required to be approved as a Senior Manager. The Directory will also make public information on additional roles, such as those providing mortgage advice, for the first time. It is helpful to do this early in the SM&CR implementation process so that the relevant Senior Manager can be involved in the development of the aspects for which they will have ultimate responsibility.The Certification Functions that the FCA has specified in its rules are:Although the implementation date for SM&CR is still a few months away, our experience of working with the banks to implement the regime in 2016, indicated that early planning is key to transitioning smoothly to the SM&CR. This is to prevent unclear allocation of responsibilities that could result in gaps.When formulating responsibilities maps, it is recommended that firms consider, among other things, whetherIf you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:Examples of good and poor practices are included in the guidance to ensure SoRs are drafted to a high standard. Show information for solo-regulated firms. Senior managers will be required to provide a statement of responsibilities (SoR) stating what they are accountable for and enhanced firms will also be required to provide a responsibilities map.The Financial Conduct Authority (FCA) has recently published its final guidance on statements of responsibilities, responsibilities maps, and its policy statement on the new FCA directory for financial services workers, ahead of the extension of the Senior Managers and Certification Regime to all FCA solo-regulated firms from 9 December 2019.