A material difference between the two regimes is that SMF holders require pre-approval from the FCA before carrying out their role and are subject to Statements of Responsibility (discussed later), whereas Certified-staff are self-certified by the firm, do not require FCA pre-approval and avoid Statement of Responsibility requirements.
Some senior staff prefer status as certified-staff in favour of having to take on the additional burden of SMF status.
Certified-staff status will not be available to those who are directors or equivalent and is more likely to apply to senior management who are below board-level, although remain sufficiently senior to warrant an additional degree of regulatory consideration and oversight.
Consideration of these points has seen firms re-assess their board and committee structures, review executive licences and/or position descriptions for consistency with the reality at the firm, accurately reflecting involvement of senior managers and meeting governance and regulatory expectations.
Statements of Responsibility
Statements of Responsibility (Statements) represent a cornerstone of the FCA philosophy in reiterating the importance it places, and wants firms and individuals to place, on the individual responsibility of senior managers.
Senior managers have always been expected to adhere to high standards of conduct in the discharge of their role, including through displaying integrity, competence and knowledge of and respect for the relevant regulatory requirements most pertinent to the individual roles. The essential elements of these expectations are set out in the FCA Handbook.
A Statement is expected to be approximately 300 words long and be expressed in positive language, describing an individual’s responsibilities.
Statements are significant because they impute culpability in respect of the matters in them. Statements effectively create a presumption of guilt, which will usually only be overcome where an individual can demonstrate, to the satisfaction of the FCA, that they took reasonable steps in the conduct of their role to meet the responsibilities described in their Statement.
Firms and impacted senior managers need to work together to agree the content of Statements and should ensure that they are accurate and properly reflect the role to which they relate.
Statements are often the subject of some negotiation and comment between the firm and senior managers, which often includes legal advice being sought by a senior manager, before they ascribe to a Statement.
The largest firms are required to ensure that they have and maintain a map of responsibilities and consider the interaction of all the Statements for the constituent senior managers at the firm at all times.
Although smaller firms do not have an identical burden, it is a very useful discipline and one which facilitates the firm, demonstrating to the FCA its efforts taken in implementing the SMCR.