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    FCA Issues Final Rules on Extension of SM&CR to Solo-Regulated Firms

    July 26, 2019

    FCA published a policy statement (PS19/20) on final rules on the extension of the Senior Managers and Certification Regime (SM&CR) to FCA solo-regulated firms, including claims management companies. Additionally, PS19/20 specifies final rules on a new Directory of individuals working in financial services. SM&CR will apply to the solo-regulated firms from December 2019. PS19/20 also summarizes FCA response to the feedback received on the consultation paper CP19/4 on optimizing the SM&CR, which FCA had published in January 2019.

    FCA has received 29 responses to CP19/4. Most respondents were supportive of the proposals. In some cases, respondents asked for further clarification on how the rules would apply. In a small number of cases, respondents opposed the proposals or suggested changes to the proposed rules. In general, FCA has implemented the proposed changes to SM&CR. The main changes to the existing rules discussed in PS19/20 include:

    • Confirming that the Head of Legal function is not required in Senior Managers Regime
    • Amending the intermediary revenue criterion for the Enhanced regime
    • Clarifying the requirements and scope of the Certification Regime
    • Extending Senior Manager Conduct Rule 4 (SC4) to non-approved Executive Directors at Limited Scope firms

    The legal instrument accompanying PS19/20 contains final rules needed to commence the SM&CR for solo-regulated firms and to deal with the other issues. As with other rules, they may still be amended by subsequent Handbook changes—for example those related to the exit of UK from EU. The legal instrument does not significantly differ from CP19/4 and the near-final rules. Firms, including authorized claims management companies, affected by these changes will move to the new regime on December 09, 2019. Handbook references in PS19/20 refer to the rules set out in the accompanying Instrument. For claims management companies still operating on a temporary permission on December 09, 2019, the rules will apply from the date the firm is fully authorized. The approach to these firms is set out in PS19/9 and in the final rules in the Instrument that accompanies this PS19/20.

     

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    Keywords: Europe, UK, Banking, Insurance, SM&CR, PS19/20, CP19/4, FCA

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