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Strengthening Accountability Survey

Senior Managers Regime is being rolled out to all firms

Firms across the UK will have received a request from the FCA to complete a survey by 28 October 2016. 

This aim of the survey is to help the FCA assess the costs of for firms who will be brought into scope of the Senior Managers & Certification Regime (SM&CR) in 2018.

SM&CR has already been implemented in banks and, in May 2016, legislation was passed to extend it to all firms authorised by the FCA and the PRA.  That legislation was called the Bank of England and Financial Services Act.

SM&CR will replace the current Approved Persons regime to create better individual accountability. You can expect much more granular detail about roles and responsibilities are included, as well as a certification regime and new conduct rules.

Definitions for SM&CR

Here are the FCA's key definitions for the survey:

Senior Manager Functions (SMF): A function we specify in our rules as requiring pre-approval by us, and which is subject to specific requirements under the Senior Managers Regime. A list of the functions that were SMFs under the banking regime are set out in Annex 1 of the Background Document.

Statement of responsibility: A statement that each Senior Manager is required to have, which clearly documents the responsibilities held. Such statements are required to be sent to the regulator as part of an SMF application for approval, or when a significant change has been made.

Responsibilities maps: A single document that describes a firm’s management and governance arrangements, including how responsibilities are allocated. 

Prescribed responsibilities: These are a set of responsibilities defined by us, which firms must assign to Senior Managers. They are responsibilities that we would normally expect to be held by a single person. The list of prescribed responsibilities under the banking regime are set out in Annex 2 of the Background Document.

Overall responsibility: In addition to prescribed responsibilities, firms must look across their business and ensure that each of the firm’s activities, business areas and management functions has a Senior Manager with overall responsibility for it. This Senior Manager must also be pre-approved by the regulators.

Criminal record checks: Mandatory requirement to check if a candidate for an SMF role has a criminal record.

 

Regulatory references: References are a tool to allow firms to share relevant information on individuals performing certain regulatory roles (such as SMFs and SHFs) to support their assessment of potential new recruits as fit and proper.

Handover arrangements: Policies put in place by a firm to ensure that a Senior Manager has the information and material needed to carry out their role before they start to perform it, or if their responsibilities change.

Significant harm function (SHF): A function that might involve a risk of significant harm to the firm or its customers. Firms must annually certify these individuals as being ‘fit and proper’ to perform their role. A list of the functions that were SHFs under the banking regime are set out at Annex III of the Background Document.

Conduct Rules: A set of conduct rules that apply to all SMFs, SHFs and all other employees except ancillary staff (such as cleaners and catering staff). Firms need to train their staff in relation to these conduct rules, and report to us any breaches of the rules (immediately for SMFs, and annually for all other staff). 

 

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