FCA has published a suite of papers feeding back on the SMCR extension, and has proposed the creation of a new directory of individuals working in financial services to enable their status and history to be checked. The directory would include all individuals who require FCA approval to hold SMFs and those who fall within the Certification regime. FCA has taken account of the desire of consumers to see information about relevant individuals. Its proposals would allow individuals to be searched by location, business for which the individual is qualified and regulatory sanctions and prohibitions. It would include details of certified individuals, non-SMF directors, previously approved persons, persons approved to SMF functions, firms and appointed representatives by a number of methods. It has published a prototype of the register, which includes all dual-regulated firms as well, and seeks comments by 5 October.
FCA has also published the near-final rules on SMCR extension and a series of guides to help firms understand what they need to do to prepare for implementation. It will apply the new regime from 9 December 2019.
The main feedback document is divided into a number of sections so that firms already subject to the banking SMCR and appointed representatives (who will in principle remain on the old approved persons regime) need read only part. The rules for insurers are contained in a separate statement.
FCA received 225 responses to its main consultation, the vast majority of which supported the proposals. As a result, FCA is in the main implementing the plans on which it consulted, except that:
- there will be no Prescribed Responsibility to inform the governing body of their legal and regulatory obligations (this was a responsibility FCA had proposed to apply to core firms);
- FCA has created an easy process for firms to voluntarily apply a higher regime tier;
- 3 of the Enhanced criteria have been amended to smooth single-year anomalies;
- firms will have 12 months to implement the Enhanced tier once they have met the relevant criteria;
- Limited Permission Consumer Credit firms will have a reporting period aligned with their annual return; and
- FCA has adjusted several of its proposed forms.
The rules FCA has now published are near final except for those that relate to benchmark activities.
There will be a transitional period. On commencement day firms will have to apply Conduct Rules to certified staff and identify existing certified staff. Over the next year they will need to train all staff, assess certification staff and identify and train certification staff who join. So by one year after implementation the Conduct Rules will apply to all staff and all initial certification assessments will be complete. Ongoing, new staff will need to be trained in the Conduct Rules and Certified Staff recertified as fit and proper at least annually. Firms will have to check their approvals on the Register are correct as soon as the new regime starts but can submit “Form K” conversion notices up to a week before commencement.
FCA’s Guide for Solo Regulated firms shows firms how they work out what type of firm they are, and then explains how it applies depending on the firm type.