By the time you read this, the new Senior Managers and Certification Regime (SMCR) from the FCA will be in place.
A few of our dealers will become Core Firms under SMCR but most will be Limited Scope firms.
Limited Scope firms will be those who have been operating under Certified Function 8 (CF8). Under the new regime, they will now operate under Senior Management Function 29 (SMF29). There is unlikely to be a requirement for any prescribed responsibilities but the named Senior Manager at the firm (the one whose name is on the FCA register) will need to have what the FCA call a ‘Statement of Responsibilities’ (SoR).
There is no set format for this Statement and no template. It simply needs to set out what that Senior Manager is responsible for in regards to finance. It should be a self-contained document and not refer to any other document. It needs to be succinct and clear. You may wish to use the second tier conduct rules set out below to help you put a SoR together.
In addition to the SoR, firms will need to ensure all employees who deal with finance comply with the Conduct Rules. There are two tiers of conducts rules; the first tier apply to everyone in the business who deals with finance and the second tier to the Senior Managers
The first tier requires that individuals:
- Must act with integrity
- Must act with due care, skill and diligence
- Must be open and cooperative with the FCA, the PRA and other regulators
- Must pay due regard to the interests of customers and treat them fairly
- Must observe proper standards of market conduct
In addition to the above, Senior Managers:
- Must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively.
- Must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system.
- Must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively.
- Must disclose appropriately any information of which he FCA or PRA would reasonably expect notice.
Firms should simply be moved onto the new regime by the FCA but they must review how they currently operate, conduct a training need analysis and draft a SoR to ensure compliance.