The Senior Managers & Certification Regime (SMCR) - CP17/40

The FCA has released the second Consultation on the proposed new regime, CP17/40, which can be seen at: 

https://www.fca.org.uk/publications/consultation-papers/cp17-40-individual-accountability-transitioning-fca-firms-and-individuals-senior-manager

This is a technical paper dealing mainly with the transition to the new regime. It covers which controlled functions will be mapped into the new regime and which will fall away (such as the Non-Executive Director function CF2).

Much of the paper, which runs to over 1200 pages, details proposed new rules and application forms.

RWA will issue a further paper summarising the main points in due course.

The new rules will start when the Treasury sets the dates.

For the purpose of the FCA draft rules that form part of this consultation, they have assumed that the rules will apply to insurers in late-2018 and solo-regulated (FCA only) firms in mid-to-late 2019. The actual commencement dates will be announced and set by the Treasury in due course.

For most firms, current approved persons will automatically be moved to the new regime. Only those in Enhanced firms, which is broadly the very largest regulated firms, will need to provide applications and supporting documents.

The FCA has also confirmed that the SMCR will NOT apply to Appointed Representatives who will remain subject to the current approved persons regime. However, their Principal firm will be subject to SMCR.

Firms will need to review their Financial Services Register entry post-conversion as it will be their responsibility to ensure that all functions have been correctly mapped into the new regime.

The consultation also covers how to report rule breaches by Certified and other staff via a new GABRIEL report.

There is a significant amount of detail about how new applications that are in the FCA system will be dealt with if they have not been finalised by the implementation date. I have not specifically commented here as there is a vast amount of text to absorb and if your firm will be affected, RWA will be on hand to assist.

Any new applications under the new system for firms or individuals will be dealt with under CONNECT, but there will be new forms to complete.

The consultation ends on 21 February 2018, so please respond to the FCA with your views as they do want to hear from you.

As more details emerge, we will issue further bulletins.

In the meantime, please speak to your RWA Regional Business Manager if you wish to discuss any of the topics outlined in this article.

About the author

Terence has over 35 years' experience in the Financial Services environment, covering general insurance, investments and mortgages.

Before joining RWA, Terence worked for a large PLC insurance brokerage in Manchester, overseeing some 20 acquisitions. He served as Compliance Director at RWA from 2011 to 2018 and has worked with insurance broking firms of all sizes across the UK. He has a particular interest in Financial Crime and the protecting the insurance broker. Terence previously served as Executive Chairman of the Association of Professional Compliance Consultants (APCC), the professional body for the compliance consultancy sector.

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