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    FCA Extends Implementation Timeline for SM&CR Solo-Regulated Firms

    June 30, 2020

    FCA announced that the HM Treasury has agreed to delay the deadline for solo-regulated firms to have undertaken the first assessment of the fitness and propriety of their Certified Persons under the Senior Managers and Certification Regime (SM&CR). The deadline has been delayed from December 09, 2020 to March 31, 2021. This will give firms that are significantly affected by COVID-19 pandemic the time to make the changes they need. FCA intends to consults on extending the deadline, from December 09, 2020 to March 31, 2021, for certain other requirements under the SM&CR. These requirements include the deadline for submission of information about Directory Persons to the Financial Services Register, the effective date of Conduct Rules, and the date by which relevant employees must have received training on the Conduct Rules. In addition, FCA has set out the expectations to help benchmark administrators and firms that are using the Appointed Representative arrangements to apply the Approved Persons Regime during the pandemic.

    Senior Managers must ensure that Conduct Rules training is effective, to ensure that staff are aware of the Conduct Rules and understand how they apply to them in their jobs. FCA will produce further communication about its expectations. FCA highlights the if firms are able to certify staff earlier than March 2021, they should do so. Firms should not wait to remove staff members who are not fit and proper from certified roles. FCA will still publish details of the certified employees of solo firms starting from December 09, 2020 on the Financial Services Register. The Certification Regime and reporting of Directory Persons do not apply to benchmark administrators, so FCA does not intend to move the deadline for benchmark administrators. Benchmark administrators have until December 2021 to train non-Senior Manager staff in the Conduct Rules. According to FCA, COVID-19 pandemic will not prevent effective implementation of Conduct Rules training in these firms, thus FCA is not considering extending this deadline. 

    Additionally, FCA recognizes that some benchmark administrators and Appointed Representatives have had to make temporary arrangements to cover absences. To provide flexibility to firms during pandemic, FCA issued a modification-by-consent to the 12-week rule, which will allow temporary arrangements for up to 36 weeks. FCA does not expect to receive notification from firms under Form D of the temporary arrangements. However, it is expected that these arrangements are clearly documented internally. Regulated firms that use Appointed Representatives to carry on regulated activity remain responsible for their Appointed Representatives and networks meeting FCA rules. Principals should continue to ensure that the:

    • Controllers, directors, partners, proprietors, and managers of an Appointed Representative are fit and proper
    • Appointed Representative is solvent and suitable to act for the firm
    • Principal has adequate controls over the Appointed Representative’s activities
    • Appointment does not prevent the firm from satisfying and continuing to satisfy the threshold conditions
    • Principal is able to monitor and enforce compliance with relevant requirements

     

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    Keywords: Europe, UK, Banking, Securities, SM&CR, COVID-19, Governance, Deadline Extension, Approved Persons Regime, Conduct Rules, FCA

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