Q. What guidance has the Financial Conduct Authority provided around the Senior Managers & Certification Regime during the coronavirus pandemic?
A. On April 3, the FCA published a statement that allows businesses to extend the ‘12-week rule’.
This allows another person to step in and cover for a senior manager who has allocated responsibilities for a period of time without approval, where the absence is temporary and unforeseen — up to a period of 36 weeks, provided they notify the FCA of their intention to extend.
The statement also contains a number of other related measures designed to reduce the burden on companies, including statements of responsibilities. No company is expected to appoint a senior manager to deal with its coronavirus response.
During the pandemic, some senior managers may not be able to work for a variety of reasons.
This may mean some of their responsibilities have to be allocated, temporarily, to another employee within the company, ideally another senior manager.
To reduce the pressure on businesses, the FCA will not enforce the requirement to submit an updated statement of responsibility where there is a significant change in the responsibility of a senior manager.
It is, however, important for the company to hold revised SoRs for this reallocation of responsibilities.
With furloughed senior managers, HM Revenue & Customs has recently confirmed that directors and members (of a limited liability partnership) can be furloughed if they receive a basic salary through PAYE.
Companies will need to consider if a director/member that holds prescribed, or other responsibilities, will continue to be active during the pandemic and can allocate these responsibilities to another senior manager or other suitability experienced person.
For example, SMF 16 Compliance Oversight, SMF 17 Money Laundering Reporting Officer and SMF 29 Limited Scope Function will continue to be required and should only be reallocated as a last resort.
Individuals on furlough are only permitted to carry out their statutory duties during this time.
When it comes to sole director businesses, unlike a company with two directors, where one can furlough and the other can assume full responsibilities for the activities of the company, it would be extremely difficult and challenging to furlough a sole principal.
Only when the company ceases to provide services to its clients/customers could they consider this outcome.
As indicated above, only statutory duties can be completed when someone is on furlough, and that effectively means no contact with any clients or customers.
The FCA does not address this specific scenario as it is likely they would not expect this to be applied in practice.
When a company does wish to consider this option, it would have to call upon its locum to carry out any (non-statutory) regulatory duties and/or client tasks that arise.
These are big decisions to be made, during unprecedented times, and I would advise you give them very careful consideration and, if you use the services of a support provider, that you consult them wherever you can.
Mark Greenwood is a director of compliance services at The SimplyBiz Group
