Financial Conduct Authority  

FCA warns advisers against complacency after SMCR delay

FCA warns advisers against complacency after SMCR delay

The Financial Conduct Authority has warned it will still take action against senior managers and certified persons for misconduct during the coronavirus pandemic, despite delays to the implementation of the Senior Managers and Certification Regime. 

In a consultation paper published this morning (July 17) the regulator warned firms would still be held accountable under its rules as it proposed extending further requirements under the recently introduced regime. 

It follows a move earlier this month which saw the FCA delay the deadline for solo-regulated firms to have completed their first "fitness and propriety" assessment of certified persons until March 31, 2021. 

Under the original rules, which came into force across the advice industry in December last year, the certification element was set to take effect on December 9, 2020. 

The regulator did not propose changing the deadline by which firms need to complete conduct rule breach reporting.

Jonathan Davidson, executive director of supervision, retail and authorisations at the FCA, said the regulator expected firms to use the extra time to implement certification and conduct rules to the "highest standards". 

Mr Davidson said: "These proposed changes recognise the exceptional stress placed on financial services firms by the Covid-19 pandemic and the importance for firms to fully and properly implement the certification regime and to train staff effectively in the conduct rules. 

"We continue to place great importance on the certification regime and the conduct rules and see this as an opportunity to raise the bar permanently around conduct, competence and culture in the financial services industry."  

Last week FTAdviser reported advisers were being warned not to put their requirements under the SMCR "on the back-burner" despite an extension to the regulatory deadline.

Today the FCA said those who were able to certify staff earlier than March next year should do so and warned firms should not wait to remove staff who are "not fit and proper from certified roles".

The regulator is expected to still publish details of certified employees on its register from December 9, stating it would be of "immediate benefit to consumers and firms".

In today's paper the FCA also said some managers and key personnel in firms had been furloughed and therefore the availability of decision-makers to implement the new rules could have been restricted.  

Training providers in the financial advice industry have also delayed exams in light of the national lockdown, which the regulator warned had made it difficult to complete the necessary training for certified staff. 

The FCA said: "We want to give firms, whose business has been impacted by the coronavirus pandemic, more time to implement and fully embed the conduct rules within their organisation and create lasting change.

"We believe that most firms will be able to meet the original deadlines and we encourage them to do so."

Respondents have until August 14 to comment on the consultation