Coronavirus (COVID-19) Update: FCA Statement – SM&CR And COVID-19 – Expectations On FCA Solo-Regulated Firms

The FCA issued a statement on 3rd April 2020 setting out its expectations to help FCA solo-regulated firms apply the SM&CR. Separate requirements apply to dual regulated firms. The FCA statement for solo-regulated firms can be viewed at the following link: https://www.fca.org.uk/news/statements/smcr-coronavirus-our-expectations-solo-regulated-firms

Statements of Responsibilities and ‘significant changes’ to Senior Manager Responsibilities

The FCA recognises that firms may need to make temporary arrangements to cover absences or change Senior Manager responsibilities in direct response to the pandemic. The FCA does not intend to enforce the requirement on firms to submit updated Statements of Responsibilities in certain circumstances. The FCA will not expect firms to notify it of these temporary arrangements under Form D but will expect allocations (however temporary) to be clearly documented by each firm internally.

Temporary arrangements for Senior Management Functions

A Modification by Consent to the 12-week rule to support firms using temporary arrangements during the crisis will be issued. If the arrangements last longer than 12-weeks firms can notify the FCA that they consent to a modification of the 12-week rule. Temporary arrangements can be extended up to 36 weeks. Notification need to be emailed to centralwaiversteam@fca.org.uk or made in writing to Central Waivers Team, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN

Furloughed Staff

The FCA recognises there may be cases where firms decide to furlough Senior Managers if they are unable to fulfil their responsibilities, for example due to illness. Unless a furloughed Senior Manager is permanently leaving their post, the manager will retain their approval during their absence and will not need to be re-approved by the FCA when they return.

Reallocating Prescribed Responsibilities

Firms should reallocate the Prescribed Responsibilities of a furloughed Senior Manager to another Senior Manager.  However, if the firm appoints a temporary replacement under the 12-week rule, the proposed Modification by Consent allows a firm to reallocate the Prescribed Responsibilities to the replacement, even if they are not a Senior Manager and, of course, updated Statements of Responsibility need not be submitted to the FCA (see above). Individuals performing Required Functions – e.g. Compliance Oversight, should only be furloughed as a last resort.

ACTION REQUIRED:

Consider your senior management arrangements and whether any re-allocation of responsibilities is required.

 

How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:

  • Jonathan Greenstein

e-mail: Jonathan.greenstein@complyport.co.uk phone: +44 (0) 20 7399 4132

  • Graham Levi-Samper

e-mail: graham.levi-samper@complyport.co.uk phone: +44 (0) 20 7399 4991

  • Simon Chapman

e-mail: simon.chapman@complyport.co.uk phone: +44 (0) 20 7399 4135

  • or your usual Complyport Consultant on +44 (0) 20 7399 4980