Financial Conduct Authority  

FCA softens SMCR rules amid virus crisis

FCA softens SMCR rules amid virus crisis

The Financial Conduct Authority has softened aspects of its Senior Managers and Certification Regime to minimise the burden on firms during the coronavirus crisis.

In a statement published Friday afternoon (April 3), the regulator said it would not enforce the requirement on firms to submit updated statements of responsibilities if the changes to staff were in response to the pandemic and would be a temporary shift.

However, the regulator said it expected allocations — however temporary — to be clearly documented internally and to be available if requested.

Other changes include an extension of the ‘12-week rule’ to 36 weeks. 

In normal circumstances, the 12-week rule allows an individual to cover for a senior manager without being approved, where the absence is temporary or reasonably unforeseen and the appointment is for less than 12 consecutive weeks.

But if this temporary arrangement lasts longer than 12 weeks as a result of the crisis, firms can notify the FCA and the arrangement can be extended for up to 36 weeks.

The FCA said: “We are offering this change because of the exceptional circumstances, as we understand that people's movements and governance arrangements will need to be kept under constant review.

“Nevertheless, we expect firms to clearly document these responsibilities, however temporary, including on relevant statements of responsibilities and responsibilities maps.”

The City watchdog also said firms were still required to allocate to the most senior person responsible for that activity or area and someone who had sufficient authority and an appropriate level of knowledge and competence to carry out the responsibility properly.

It clarified any senior managers who had been furloughed would retain their approval as a senior manager during their absence and would not need to be re-approved by the FCA when they returned.

But the firm was still responsible for ensuring the senior manager was fit and proper while ‘prescribed responsibilities’ should be passed to another senior manager, it added, and those performing required functions, such as compliance oversight, should only be furloughed as a last resort.

The FCA has already said advisers could take a flexible approach to Mifid II's 10 per cent depreciation notification rule and clarified its capital adequacy rules, in response to the prevailing crisis.

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