By Kali Bagary | 15 NOVEMBER 2016 |

Regulators are looking at past regulations such as the Approved Person Regime (APR) as they are trying to address the issues of accountability in the financial services sector – focussing on the senior management levels.

The FCA has mandated a new framework for financial services to comply with named persons in the Senior Managers and Certification Regime – SMCR. This means that any persons in running regulated firms must have clearly defined responsibilities and behave with honesty, integrity and skill. Crucially, this must be documented and proven, when called upon to do so by the regulators.

Are you aware of the key dates regarding these regulations? I’ve listed them as a reminder:

  • 7 March 2016 – SMCR regulations take effect
  • 7 March 2017 – completion & certification of all relevant staff – DEADLINE
  • 2018 – additional firms such as hedge funds that are regulated under Financial Services and Markets Act to fall under the SMCR (to be confirmed).
  • What you therefore need to do:

  • Define all key functions within the company & report this to the regulator
  • Produce an up-to-date map of responsibilities & allocated senior management, as per the guidelines set out in the SMCR
  • Obtain pre-approvals for individuals carrying out the Senior Management functions as defined by the regulator
  • Document, complete and review ongoing ‘fit and proper’ tests of all function heads performing key functions
  • Implement any new set of conduct rules as they apply to employees falling within the SMCR regulations
  • Set up a strategy to police individuals under the SMCR and demonstrate automatic notification to the regulator of any suspected persons failing to adhere to the rules
  • Generate a responsibilities map on demand
  • Prove governance structure
  • Sounds a large task? Indeed it is. There are numerous Fintech solutions which can provide elements of the above. Some integrate easily into other systems; however can cause a headache during one or more software patches/upgrades. Some ‘solutions’ include various Excel spreadsheets which are pulled together in a mad rush when the regulator comes knocking at the door.

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