This regime emphasises the personal accountability of individuals in senior management positions that could have a notable impact on the FS performance of the company or industry. This is for individuals performing FCA-approved Senior Management Functions (SMFs) which might involve a risk of serious consequences for the firm, or for business or other interests in the UK. Senior Managers must be pre-approved by the FCA and have written Statements of Responsibilities (SoR) setting out areas they’re responsible and accountable for.
The FCA has set out a list of Functions which must each be allocated to an appropriate Senior Manager, who must then take reasonable steps to prevent a regulatory breach occurring. Enhanced scope firms must use a Responsibility Map setting out the firm’s management and governance arrangements.
This depends on the type of firm and its structure. There is no territorial limitation so the regime applies to anyone who performs an SMF, UK-based or otherwise.
Yes, subject to any relevant independence requirements and the individual must be approved for each SMF, although s/he only needs one Statement of Responsibilities form – this must describe all responsibilities under each function.
CR improves accountability for those who aren’t Senior Managers but could cause significant harm to the firm or its customers. Individuals don’t need to be FCA-approved but firms must certify internally that they are Fit and Proper to conduct the assigned responsibilities and issue a certificate to this effect on an annual basis. CR is limited to UK-based employees (except Material Risk Takers or those dealing with UK clients, where no territorial limitation applies). Responsibility for CR must be allocated to a Senior Manager who will be personally accountable for the regime.
These new, enforceable rules outline expectations for personal conduct for all staff within financial services. They apply to all employees including those in the Senior Managers or Certification Regimes, but not to ancillary or purely administrative staff, e.g. post room workers, cleaners or caterers. The Conduct Rules replace the ‘Statements of Principle and Code of Practice for Approved Persons’ in the FCA Handbook. Firms will need to train personnel on the Conduct Rules and report certain breaches of these rules to the FCA on a periodic basis, or immediately, where it concerns a senior manager.
FITNESS & PROPRIETY – these requirements include adequate training, qualifications, reference and criminal records checks. They apply to both the Senior Managers and the Certification Regime and must be renewed regularly.
Note: Whilst Senior Managers must be formally approved by the FCA themselves, it is the responsibility of your organisation to demonstrate that certified staff are fit for the role they’ve been assigned.