FCA reminds firms about the extension of the regime and encourages early preparation

On the 16th April the FCA issued a reminder to all the firms that are affected by the extended SM&CR Regime which comes into force on the 9th December 2019 to get started on their preparation for implementation now.

As a child your mum or the dinner lady used to say if you don’t eat your greens you won’t grow up to be big and strong. I took a chance and while I’m only 5ft 2 it didn’t seem to do me any harm but this is not a case of refusing to eat your greens, taking a chance on whether you will grow up to be big and strong.

The Regulator is developing a targeted press release with PR Agency Kindred “to encourage firms” who haven’t started their preparations to get going – you may not like regulation, like I didn’t like greens but you need to swallow this quickly if you want to  grow up and be big and strong (or remain big and strong).

Being the cynic that I am I see this as a clear case of “we gave you enough reminders and enough time to prepare adequately and if you haven’t don’t moan at the consequences that could be coming your way” or to carry on the previous analogy “we told you what would happen if you didn’t eat your greens”.

AccountabilityBut this isn’t about cabbage – From the first Consultation paper that was issued on the Extended Regime you could tell that the assumption by the author (the FCA) was “we would expect you to be familiar with the requirements for the first tranche of SM&CR for the banking community before you read this CP”.

At FSTP we make no apology for repeat reminders to our clients about what they need to consider in preparation for the SM&CR. We are still working with firms in the first round of SM&CR who are refining their delivery of the regulators expectations.

Whether you ask us to support and help you with your preparation and implementation or not we will still be encouraging firms to take proactive measures to ensure you meet the requirements at the right time.

With the Banks the PRA had a list of the firms they knew would not submit their documentation on time and that list was proved to be correct – Do you want to be one of those firms on the FCA’s list?

With the approach they have taken there will be no hiding place, no room for excuses – it just runs shy of a Dear CEO letter – which may still be sent.

SM&CR is all about having the right culture through effective governance by ensuring individuals are accountable for the areas they are responsible for.

All Senior Managers must have a Statement of Responsibility. The FCA has urged firms to prepare Statements of Responsibilities (SoRs) and Responsibilities Maps as early as possible. They published guidance (https://www.fca.org.uk/publications/finalised-guidance/fg19-2-smcr-guidance-statements-responsibilities-and-responsibilities-maps  in March to give firms practical assistance and information on preparing SoRs and Responsibilities Maps.

Anyone having gone through this will tell you it is not as straight forward as it sounds especially when it comes to the allocation of Prescribed and Other Responsibilities and the touchy subject of who will take the responsibility for the competence of those in the Certification Regime – don’t think you can palm it off to the Head of HR unless they take a place on the Board as an Approved Director.

FCA website: https://www.fca.org.uk/publication/policy/guide-for-fca-solo-regulated-firms.pdf

This is what Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the FCA, said:

The Time is Now Urgent Action Needed Clock 3d Illustration

“Senior leaders should view the regime as a catalyst to inspire positive culture change at their firms. The SM&CR is an important way to ensure that individuals at all levels within firms take personal responsibility for their actions. It is good for business when employees buy into a firm’s purpose, feel personal accountability and are inspired to speak up (and to listen). This can be encouraged through the new conduct rules. This kind of culture supports a healthy and inclusive workplace for employees, innovation and sustainability, and thoughtful identification and mitigation of risk.”

Is it just me or did that speech have menacing undertones? – Best eat your greens!

At FSTP we look to Simplify the complexity of regulation into practical application. If we can help you with any element of the requirements or anything else that you need help and support with as a regulated Financial Services firm contact us today.

Philippa Grocott

Business Development Partner