The Financial Conduct Authority (the “FCA”) is seeking to make a simple and clear transition from the Approved Persons Regime to the Senior Managers and Certification Regime (“SMCR”) and therefore consults on how firms and individuals will transition to the SMCR. The new regime should strengthen accountability in the financial services. The requirements depend on whether firms are classified as Limited Scope, Core or Enhanced.

The FCA proposes:

  • To automatically convert most of the approved persons at Core and Limited Scope firms into the corresponding new Senior Management Functions.
  • Enhanced firms need to submit a conversion notification (Form K) and accompanying documents (statements of responsibilities (SoRs and Responsibilities Map)

The provisions of the Approved Persons Regime will still apply to Appointed Representatives.

The FCA also published a consultation paper on the duty of responsibility for insurers and FCA solo-regulated firms (CP17/42). Under the Duty of Responsibility, the FCA could take enforcement action against a Senior Manager where:

  • there was a contravention of a relevant requirement by the Senior Manager’s firm;
  • at the time of the contravention or during any part of it, the Senior Manager was responsible for the management of any of the firm’s activities in relation to which the contravention occurred; and
  • the Senior Manager did not take such steps as a person in their position could reasonably have been expected to take to avoid the contravention occurring or continuing.

When enforcing the duty of responsibility, the burden of proof is on the FCA to show that the Senior Manager did not take the steps necessary steps to avoid the firm’s breach.

All FCA solo-regulated firms will be affected as well as EEA and third-country branches. The consultation closed on the 21 February 2018.

Read the FCA press release, the FCA’s consultation paper CP17/40 and the FCA’s consultation paper CP17/42