Financial Conduct Authority  

Embrace SMCR delay with caution

Embrace SMCR delay with caution

Investment companies and advisers have less than three weeks to respond to the Financial Conduct Authority’s consultation on delaying the extension of the Senior Managers and Certification Regime.

Many companies will welcome the 16-week extension to buffer any difficulties that may arise in what should be the final stages of implementation. 

It is a combination of concerns that have prompted the delay, including the FCA’s assessment process not running as expected and the effects of the coronavirus putting stresses and strains on normal working life for companies. 

Despite the goalposts shifting, businesses must continue driving towards meeting the original date and should not lose the momentum they built up since December last year in implementing the spirit of SMCR. 

How to maintain momentum 

By now companies will be into the weeds of their fit and proper assessments for certification staff – an exercise that requires co-ordination across line managers, compliance and HR, and with board oversight throughout. 

With remote working, delegation and decision-making can appear more of a chain process. Companies should pay even more attention to the record keeping of critical decisions so an audit trail can be maintained. 

On top of these assessments, there is training required for conduct rules staff before they can obtain certification. 

In the current environment, training cannot be face-to-face and many alternative online solutions that are being sought may not be as time efficient as originally hoped, meanwhile preparing and sitting exams will require out-of-hours work on top of the day job at a time when personal lives might be stretched to the max. 

FCA’s flexibility should not be taken for granted

The FCA clearly recognises that companies’ resources are under pressure. Covid-19 has forced many to appoint staff to new roles and some furloughing of existing staff. The FCA wants to ensure any strain on meeting the SMCR’s deadline does not come at the cost of rushed or poor implementation. 

Companies should be prepared to demonstrate their reasoning for delaying implementation, and therefore must be careful not to do so unnecessarily.

It cannot be ignored that the extension does not only help alleviate immediate pressure points on businesses, it also provides the FCA with extra time to process the bulk upload of FCA directory submissions it has received from solo-regulated companies and to load the correct data across some 47,000 businesses. 

Quality implementation 

With an extended deadline for full implementation, both the regulator and companies should now be able to ensure quality and sound processes are in place ahead of time, without needing to rush and risk non-compliance. 

With that in mind, the message to companies is: do not rush, but only use the extension if you really have to. It is worth getting the balance right.

Linda Gibson is director of regulatory change at BNY Mellon’s Pershing