Q. Under SM&CR, is there a difference between senior managers and certified persons?
A. Since we started talking about theSenior Managers and Certification Regime, senior managers have tended to receive most of the attention, but the two parts of the new regime are not interchangeable.
The certification regime covers individuals performing a role that could have a significant impact on customers, the company and/or market integrity.
These individuals will be known as certified persons. The Financial Conduct Authority will not approve certified persons; instead it will be up to the company to check and confirm (certify) at least once a year that these people are, and remain, suitable to hold their position.
The company will need to create a body of evidence through a fit and proper assessment of the certified person, covering the three segments of ‘fitness and propriety’, which are: honesty, integrity and reputation, financial soundness, and competence and capability.
If the business is satisfied that the individual is suitable to hold their position, it will then need to issue a certificate to the certified person for the activities for which it has assessed them competent.
This assessment must be carried out by December 9 2020 at the latest for existing certified persons, who are within the company at December 9 2019.
Senior managers will not automatically be certified persons.
However, if an individual is a senior manager and carries out a certified function, they will need to meet the requirements of both regimes.
Unlike the senior managers regime, there is no automatic mapping across and there is no predefined list of who within a business will be a certified person; again, this falls to the company to determine.
The certification regime only applies to individuals that fall within the FCA’s definition of an ‘employee’, which includes anyone who works for the business on an employed or self-employed basis.
It does not cover those appointed externally who provide support to the business.
In order to identify a certified person, the company must consider whether they perform a certified function and, crucially, all companies must identify these individuals before commencement of the regime on December 9.
The FCA has created a list of certification functions.
Although they may not apply to all businesses, some of the most key are: functions that require qualifications, managers of certification employees, and client-dealing functions.
Mark Greenwood is director of compliance services at The SimplyBiz Group