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    FCA Consults on Implementation Timeline for SM&CR Solo-Regulated Firms

    July 24, 2020

    FCA proposed to extending implementation deadlines for the Certification Regime and Conduct Rules for the solo-regulated firms. The proposal is to extend the deadline from December 09, 2020 to March 32, 2021 for the date the Conduct Rules come into force, for submission of information about Directory Persons to the Financial Services Register, and for changing references in the rules to the deadline for assessing Certified Persons as fit and proper (which has been already agreed upon by HM Treasury). The comment period for this consultation will end on August 14, 2020. HM Treasury will lay a Statutory Instrument before Parliament to delay deadline to the Certification Regime until March 31, 2021, to give time to firms significantly affected by COVID-19 to make the needed changes.

    If firms are able to certify staff and submit information about directory persons to the Financial Services Register earlier than March 2021 they should do so. FCA will still publish details of certified employees of solo firms starting from December 09, 2020 on the Financial Services Register as FCA expects that this published information will be of immediate benefit to consumers and firms. FCA also added guidance about how the Certification Regime applies during the transition period, if a firm chooses to certify staff before the new deadline. FCA also proposed to extend the implementation deadlines for Claims Management Companies by an equivalent period. This would mean that such a company receiving full authorization on or after December 09, 2019 would have just over 15 months after the date of its full authorization to fulfill the requirements. FCA expects accountable senior managers to ensure that all Certified Persons are fit and proper. Firms should not wait to remove staff members who are not fit and proper from certified roles. Similarly, accountable senior managers must ensure that conduct rules training is effective, so that staff members are aware of the conduct rules and understand how they apply to them in their jobs. The effective delivery of these programs will require planning, time, and effort. 

    All FCA solo-regulated firms authorized to provide financial services under Financial Services and Markets Act 2000 would be able to use the proposed extension. Appointed Representatives would also be in scope of the proposed extension to the reporting deadline for Directory Persons. The Certification Regime and reporting of Directory Persons do not apply to benchmark administrators. Hence, FCA does not intend to consult to move the deadline for benchmark administrators. Benchmark administrators have until December 2021 to train non-senior management staff in the Conduct Rules. The Senior Managers & Certification Regime (SM&CR) is designed to reduce harm to consumers and strengthen market integrity. By creating a system in which staff take responsibility for their actions, there is improved conduct at all levels and it is easy to understand who does what. The SM&CR also enables firms and regulators to hold people to account. It is a key part of the continuing focus of FCA on firm culture.

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    Comment Due Date: August 14, 2020

    Keywords: Europe, UK, Banking, Insurance, Securities, SM&CR, COVID-19, Operational Risk, Conduct Risk, Implementation Timeline, Certification Regime, FCA
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