January 23, 2019

FCA published the consultation paper CP19/4, which proposes several amendments to the Senior Managers and Certification Regime (SM&CR) for banking firms, insurers, and FSMA-authorized solo-regulated firms [FSMA: Financial Services and Markets Act 2000]. The proposals are designed to ensure the effectiveness of the SM&CR and support its objectives. Comments are requested by April 23, 2019. FCA will publish the rules and guidance in a policy statement in the third quarter of 2019.

CP19/4 will primarily be of interest to banking firms, Solvency II and large non-directive insurers, and enhanced solo-regulated firms. It will also be of interest to the incoming branches of overseas relevant firms as well as other groups, particularly legal professional bodies. It may also be of interest to other FSMA-authorized firms that the SM&CR will be extended to. This paper may also be of interest to consumers interested in how the SM&CR operates within relevant firms to enhance individual accountability. CP19/4 proposed amendments related to the following:

  • Clarifying the application of the SM&CR to the Legal Function
  • Amending the intermediary revenue criterion for the Enhanced regime
  • Amendments to the Certification Regime
  • Extending the application of Senior Manager Conduct Rule 4 (SC4) to cover non-approved executive directors
  • Minor changes to regulatory forms
  • Amendments to Handbook text on the detailed application of functions to Limited Scope firms to align this with our SM&CR near-final rules for solo-regulated firms and final rules for insurers

SM&CR was introduced for banking firms in 2016 and insurers in December 2018. It will apply to solo-regulated firms from December 2019. FCA made near-final rules on the SM&CR in July 2018 and final rules for insurers in September 2018. When consulting on these rules, a few areas requiring changes were identified. The proposals set out in CP19/3 are intended to provide extra clarity in certain areas and to help firms adjust to the SM&CR.

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Comment Due Date: April 23, 2019

Keywords: Europe, UK, Banking, Insurance, SM&CR, CP19/4, Solvency II, FCA

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