Former FCA technical specialist Rory Percival has warned large advice firms should already have plans in place to satisfy the new Senior Managers and Certification Regime rules.
The new rules 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.
Even though the regime won't come into force until the end of this year, Mr Percival said: "For all firms SM&CR will be a fair bit of work, but for medium and large firms it will be a heck of a lot of brunt work on training, competence and human resources.
"The process of preparation will be time consuming and if people haven't got their project plans in place, they need to as a matter of urgency - larger firms should have already."
It should be less of an issue for smaller firms with one or two senior managers, added Mr Percival.
Mr Percival said it is possible that the new rules will see those at the top of advice firms take a step back in the coming year.
He said: "I think the individual responsibility being sought under SM&CR can be a scary thing for those individuals, and perhaps we can anticipate there will be senior managers in firms who are now having discussions as to who should accept responsibility for certain areas of the business.
"But in practice, for the bulk it is going to be obvious who is responsible for certain aspects of the firm."
Mark Turner, managing director of compliance and regulatory consulting practice at Duff & Phelps, said the greatest administrative burden will be placed on those largest firms with a large population.
He said: "It is fair to say because this regime is a bit later than originally expected, all but the very largest firms haven't really kicked off their SM&CR preparation plans in earnest yet, but the biggest firms are doing that now.
"We are at the point now where people are starting to think what this regime might mean to them, start thinking about broadly how can we approach this and how are we going to distribute accountabilities between us.
"Those conversations are starting to happen now but I think its fair to say none of the firms in this industry group have got all the answers at this point."
Mr Turner said if firms have good oversight, governance models and a positive culture from the top with mature governance then they do not have much to be concerned about.
He added: "Where that maybe isn’t working to the best standard as it could, then I think now is an opportunity for firms and individuals to make sure what they have is going to support them when it comes to taking on these accountabilities under the new regime."
Mr Turner suggested the main requirement under the SM&CR will be to demonstrate to the regulator that senior management took reasonable steps in their position in the event of a wrongdoing.
He said: "For example, if you have a rogue adviser who offered inappropriate advice that led to customer harm, a senior manager will under this regime have to answer questions to demonstrate to the regulator they took reasonable steps for somebody in their position.
"It is not the case that every time something goes wrong a senior manager should be necessarily subject to enforcement action, but senior managers under this regime will need to be in a position where they can answer the necessary questions."
David Mapplebeck, chief administrative officer at Northern Trust, said when the SM&CR was first introduced for banks many firms took the opportunity to re-assess the roles played by senior executives, but at an administrative cost.
He said: "The extended SM&CR is likely to have a similar positive impact on asset managers and other regulated firms. However, the cost, in terms of management time and resources required to implement and run the SM&CR within firms, should not be under-estimated.
"Firms that have a history of regulatory failure may have difficulty recruiting for senior roles and firms with large certified person populations will need mechanisms in place to track and manage them.
"The FCA has provided some good guidance documents setting out how they expect the SM&CR to work – firms should not delay putting their plans into effect in good time for the start of the regime in December."
At a Treasury select committee accountability hearing last week Andrew Bailey, chief executive of the FCA, and Charles Randell, chairman of the FCA, faced questions from MPs as to the effectiveness of the SM&CR in holding senior management to account in the banking sector.
rachel.addison@ft.com
