The Financial Conduct Authority has confirmed it will be relying on individuals to ensure the Senior Managers & Certification Regime is properly implemented, confirming it will not be able to supervise the majority of firms.
The new rules, which have already been in place for banks, are to be introduced across the wider financial services industry in December this year.
Under the Senior Managers and Certification Regime, bosses performing key roles need FCA approval before starting work and receive a 'statement of responsibilities' that clearly says what they are responsible and accountable for.
Firms must also provide 'responsibilities maps' setting out the responsibilities of their senior managers, and their management and governance arrangements. At least once a year firms need to certify that senior managers are suitable to do their jobs.
Speaking at a Tax Incentivised Savings Association conference in London today (January 29), Peter Ewing, technical specialist at the FCA, said the regulator will largely be unable to check the certification has been adequately implemented across the industry.
Responding to a question from the audience, Mr Ewing said: "Like anything else we do in supervision, it is risk based and the responsibility very much lies with the firm and the senior managers at the firm to ensure certification does happen properly."
Mr Ewing said the FCA may in the future return to do further work looking into certification, but this could not be confirmed at this stage.
He said: "Each time we look at what our supervision priorities are from year to year, we may well look at firms' certification processes at some point in the future.
"This may be on a wider basis or possibly more likely on a sub-sector basis, on a sector we feel is important.
"For example, you could imagine that the top of the IFA sector might feel like an important area."
Mr Ewing stressed the regulator’s focus would largely be on how a firm approaches certification rather than the performance of one employee, but admitted there might be cases where concerns are raised over a particular individual which then lead to questions about the firm’s broader certification process.
He added: "Our approach is it is the responsibility of firms and our interest is in whether that process has been put in place correctly by the firm, rather than trying to second guess whether an individual actually is fit and proper."
rachel.addison@ft.com
