Further FCA consultations on extension of SMCR

Published: 18 December 2017

On 13 December, the FCA released the technical consultation paper (CP17/40) on the Senior Managers and Certification Regime, detailing the arrangements to transition individuals to the new regime.

While Treasury is yet to set the final timeframe for the new rules to commence, for the purposes of this paper, the FCA has advised it is assuming that the rules will apply to insurers in late 2018, and to solo-regulated firms in mid-to-late 2019. The FCA has also confirmed that the Treasury intends to commence the requirement for firms to certify relevant employees as fit and proper for the first time 12 months after the start of the main SMCR (according to this timeframe, in mid-to-late 2020). However, firms would still need to have identified their certified staff from commencement, as those employees must meet the Conduct Rules from day one of the regime. For all other staff who are not senior managers or certified staff, the FCA is proposing to apply the conduct rules 12 months after commencement to enable sufficient time for firms to roll out training.

In terms of transitioning to the new regime, the paper proposes to:

  • automatically convert most of the approved persons at Core and Limited Scope firms into the corresponding new Senior Management Functions;
  • require enhanced firms to submit a conversion notification and accompanying documents.

Responses to the technical paper are due by 21 February 2018, and AIMA will seek members’ views on the proposals to form our response.

Separately the FCA has also published two other relevant consultation papers:

  1. Consultation Paper CP17/37 on Industry Codes of Conduct and Discussion Paper on FCA Principle 5 – This paper seeks to provide clarity on the FCA’s position in relation to authorised firm’s conduct in relation to unregulated activities. Of particular interest, the FCA has included a chapter (for discussion rather than consultation) raising the idea of extending Principle 5 regarding market conduct (a firm must observe proper standards of market conduct) to unregulated activities. Responses are due by 5 February 2018.
  2. Consultation Paper CP17/42 on The Duty of Responsibility for insurers and FCA solo-regulated firms – This paper notes a number of definitional changes to the FCA Handbook as proposed in the FCA’s main SMCR consultation published in July 2017, and does not otherwise propose other changes to the Handbook to reflect the extension of the duty of responsibility to FCA solo-regulated firms. Responses are due by 21 February 2018.

If members have any questions, or wish to contribute to our responses on the above consultations, please contact Adele Rentsch.