The deadline for the extended SM&CR regime is fast approaching! All firms will be required to have fully implemented the new regime by 9 December 2019.
The SM&CR sets a new standard of personal conduct for everyone working in financial services and enhances senior management accountability. A key requirement under the SM&CR is that all Senior Managers must have a Statement of Responsibilities (SoR). In addition, all enhanced firms must also have a Responsibilities Map (albeit all firms, not just enhanced firms, will need to go through the process of preparing a Responsibilities Map to enable them to be satisfied that the SoR cover all relevant parts of the business).
The FCA has published final guidance (FG19/2) to assist firms preparing their SoR and Responsibilities Maps, providing examples of good and poor practice. This guidance is designed to be read alongside the Guide for FCA solo-regulated firms issued in July 2018.
What should firms be doing now?
Whilst the end of the year seems far away, it is important that firms engage in this process now, if they are not already doing so! The 9 December 2019 is the “go live” date. However, there is a lot of preparation which needs to be undertaken prior to this date! Indeed, the FCA has said that it expects Senior Managers to prepare early, using the opportunity to create and maintain healthy firm cultures where people do the right thing and take responsibility for consumer outcomes. This includes taking individual accountability and improving staff propriety, skill and capability.
- Get the right people involved:
- Overall responsibility – allocate one individual (i.e CEO) to take responsibility for overseeing and managing the project.
- The Board should be fully engaged in the process. SM&CR should be a regular Board Agenda item. SM&CR involves a change in the culture of the firm and this should be led by the board and by senior management.
- HR has a key role in relation to a number of aspects including:
- Recruitment, identifying roles in scope now / in the future / need for clear job and role descriptions
- Procedures for regulatory pre-approval and annual certification
- Reviewing employment contracts
- Performance management / appraisals / objectives
- Identifying and escalating breach of the new conduct rules
- Regulatory references
- Legal / Compliance
- Updating policies and procedures
- IT support
- Maintain and update a project plan so there is a clear idea about what needs to be done and by when. This should provide an audit trail of the process which the firm has gone through!
- Communicate with and engage staff – training / getting all staff on board and fully appraised of the regime.
- Ensure that individuals who require approval under the existing Approved Persons Regime are approved in appropriate controlled functions.
- Create SoR and identify staff who will be required to be certified.
- Provide training for Senior Managers and Certification staff on the new conduct rules.
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