Time remaining for SMCR compliance deadline for solo-regulated firms:
The FCA has extended the deadline for fulfilling certain elements of the Senior Managers and Certification Regime (“SMCR”) from 9 December 2020 until 31 March 2021.
The FCA advises that it has made this change in order to give firms significantly affected by Coronavirus some additional time to fully implement SMCR.
This deadline extension applies to so-called ‘Solo-regulated firms’ – broadly speaking firms that are authorised and regulated by the FCA. SMCR took effect for Solo-regulated firms on 9 December 2019. Whilst substantive components of SMCR, including the Senior Managers Regime, took effect on this date, firms also have a transitional period to complete the following aspects of the regime:
Provide training to employees subject to SMCR (aside from Senior Managers and Certified Staff) on the Conduct Rules, which take effect for relevant employees at the end of the transitional period. (Note that for Senior Managers and Certified Staff the Conduct Rules have in any event applied since 9 December 2019.);
Assessing Certified Persons as fit and proper (i.e. conducting the initial certification; going forward this will be an at least annual requirement); and
Providing information to the FCA on ‘Directory Persons’ (including Certified Persons and Non-executive Directors) so that they can be included on the newly launched Directory.
In-line with other regulatory extensions prompted by Coronavirus, the FCA notes that unaffected firms should seek to complete the requirements earlier than March 2021 if they are able to do so – the fit and proper certification for Certified Persons is cited in the FCA post. Many firms will seek to adopt this approach, on the premise that not conducting an early assessment a Certified Person – that turns out to be not fit and proper – carries regulatory and legal risk.
In addition, the FCA intends to publish details of Certified Persons on the Directory from 9 December 2020 i.e. this deadline remains unchanged. Noting that Certified Persons includes – for instance – portfolio managers, investment advisers and traders, firms that would like their publicly available Directory entry to be accurate from the offset have a further incentive to complete the outstanding processes affecting Certified Persons sooner rather than later.
The FCA also notes that Senior Managers must ensure that Conduct Rules training is effective, and that they will be producing further communications about their expectations.
The adoption of SMCR for Solo-regulated firms comes at a challenging time for the UK financial services sector. SMCR is intended to be a game changer – improving culture, conduct and accountability at all levels within an organisation. The FCA has a webpage setting out its expectations in this regard.
In our view, firms should continue to ensure that their SMCR implementation planning remains robust, and that this reflects the changes to lines of communication and working habits that have characterised these past few months. Crucially, this includes ensuring that all relevant staff have a sound understanding of not only SMCR but also their other compliance related responsibilities and obligations. In that regard, we have taken the decision to afford a 10% early-bird discount offer on all our online SMCR training courses for the month of July, to support the FCA in their endeavour for firms to implement and train their staff on SMCR sooner rather than later, in accordance with their objective of improving culture, conduct and accountability at all levels within organisations.
With most UK employees still working from home, while the deadline has been extended, there really is no time like the present to implement online SMCR training in support of the FCA’s SMCR compliance objectives.