FCA publishes final rules on extension of the SM&CR

Alarm

Today (26 July) the Financial Conduct Authority has published its final rules on the Senior Managers and Certification Regime (SM&CR).

The rules, published on the regulator’s website are the final regulations on the extension of the SM&CR to FCA solo-regulated firms, including claims management companies.

All solo-regulated firms will fall under the regime from 9 December 2019, as we detailed in a blog last month, The SMCR is coming to solo-regulated firms; what do you need to know?

Increasing accountability for governance and good practice

The SM&CR aims to strengthen individual accountability and, in the words of the regulator, ‘help set a new standard of personal conduct for people working in financial services’.

The regime first began coming into force in March 2016. You can read more about its requirements, and what firms need to do, in our blog looking at how firms could prepare for it.

In July 2017, the regulator announced plans to extend the regime to almost all regulated firms, and in January this year launched a consultation on changes designed to optimise the SM&CR.

The final rules published today reflect the outcomes of this consultation and are relevant to all SM&CR firms, including claims management companies. The FCA took over regulation of claims management firms on 1 April this year.

What do the final rules cover?

The FCA statement confirms that in general, it has implemented the proposed changes to the SM&CR as consulted on. These include:

  • Confirming that the Head of Legal function is excluded from the requirement to be approved as a Senior Manager
  • Clarifying the requirements and scope of the Certification Regime
  • Extending Senior Manager Conduct Rule 4 (SC4) to non-approved Executive Directors at Limited Scope firms

A full policy statement on the regulator’s website has all the details of the final rules.

What happens next?

All firms affected by the changes, including authorised claims management companies, will move to the new regime on 9 December 2019.

CMCs still operating on a temporary permission on 9 December 2019 will see the rules apply from the date the firm is fully authorised. The approach to these firms is set out in the policy statement and in the final rules in the Instrument that accompanies the statement; both of these are available on the FCA’s website

Prepare your firm for the new regime

You can read more on how solo-regulated firms can prepare for the SMCR in our blog, SMCR is coming to solo-regulated firms; what do you need to know?

You may be a CMC and new to FCA regulation and the wealth of terminology that comes along with it. Or you might be a longstanding Compliance professional.

Either way, if you would welcome a refresher on regulatory compliance jargon, why not download a copy of our Financial Compliance Glossary?

It defines some of the most frequently-used words and phrases in UK financial compliance and is an invaluable reference. You can download a free copy from our resource library.

Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.

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