Regulation  

What is in store for advisers in 2018?

This article is part of
Guide to the senior managers regime

Ms Roberts says an additional challenge will be the removal of the approved persons regime (Aper) and its replacement with the certification regime.

This means any staff member which could pose a risk to the firm or customers must be certified as fit and proper by the firm, necessitating the correct job descriptions and other people processes are in place.

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Ms Roberts adds: “The adviser will no longer be a registered individual, though the onus passes from the FCA to the firm to certify as fit and proper any staff member which could pose a risk to the firm or customers, both initially and annually.

“There is therefore the concern this might increase costs as fitness and propriety tests need to be devised and carried out on staff annually, so new systems will have to be put in place to deal with this.”

Arpita Dutt, partner at Brahams Dutt Badrick French, adds: “These reforms will certainly increase pressure on senior managers.

“At the very least, it is likely to encourage protective practices such as record keeping.

“On top of the uncertainty created by Brexit, there will be a raft of compliance processes to put in place and a new whistleblowing reporting regime, all to be overseen by the senior managers.”

Additionalhurdles
Allocation of responsibilities between senior manager where there are shared responsibilities in a firm.

Additional management time.

Additional compliance costs - the statements of responsibilities will need to be checked by a compliance professional; certification and conduct elements will bring reporting burdens and fitness and propriety tests will need to be devised.

Annual certification.

Training costs re new rules of conduct.

Effect on recruitment, as hiring costs may increase.

Staff demanding higher salaries due to increased responsibilities.

But regardless of the change, Linda Todd, head of operations for Bankhall, is sanguine. She comments: “Firms can begin to prepare for and mitigate the impact of these changes by reviewing and strengthening their systems and controls.

“Ultimately, continually reviewing systems and controls is just good business practice. It enables firms to spot emerging issues and trends early, which helps to ensure they are in good shape to deal with the changes and challenges ahead.”