The FCA bring this latest extension of the Senior Managers and Certification Regime (SMCR) into play on 9 December 2019 any dealerships offering finance will need to be ready.
If you are already a Limited Permission Consumer Credit Firm (which most car dealers will be as their main business is selling cars and not finance), you will transfer over to become a Limited Scope SMRC firm. As such, you will be subject to fewer requirements than any Core firms (banks and insurers) but there is work to do and with the FCA focus still firmly on the motor industry, you must do it and get it right. On the plus side, as a ‘solo-regulated’ firm, you will only have the follow the FCA rules and not those of the Prudential Regulation Authority (PRA).
SMCR has three elements: 1. the Senior managers regime (SMR) – this focuses on the most senior people in the firm who perform Senior Management Functions (SMFs). 2. the Certification regime – this covers employees who are not senior managers, but whose jobs mean they can have a big impact on customers, and 3. the Conduct Rules – these are new standards that will apply to employees across the financial services industry.
You will need to consider if anyone performs any SMFs and also decide who should be covered by the certification regime. As a dealership involved in finance, you must take reasonable care to ensure that no employee who is involved in selling finance does so without having been certified (by yourselves) as fit and proper to do so, both at the point of recruitment and on an annual basis. It will be down to you to undertake the relevant checks and approve them as ‘fit and proper’ and to decide if they do actually come under the regime or if they are merely ancillary. There is no harm in extending fit and proper checks to anyone involved in the finance process as it is better to be over cautious than under cautious when it comes to the FCA. If the FCA do come knocking, they will look for evidence that you took steps to satisfy yourself of your employee’s a) ‘honesty, integrity and reputation’, b) ‘competence and capability’ and c) ‘financial soundness’. This is likely to include undertaking CRB checks, ensuring each person is fully trained and up to date with their Continuing Professional Development (CPD) and checking if an employee or prospective employee has been made bankrupt or has any unpaid CCJs.
Although some of this may already be in place as part of your Approved Persons Regime, you do need to review your set up to ensure you stay on the right side of the FCA.
We’re here to ensure all used car dealerships deliver a better car finance experience for their customers. With over 4,000 approved dealer partners we ensure you are properly supported and connected with a range of flexible finance options, allowing you to lend and your customers to buy in complete confidence.
