Senior Managers Regime

Last October HM Treasury issued a policy statement in which it advised:

  • the Government considers it appropriate to extend the Senior Managers Regime (SMR) and the Certification Regime (CR) to all financial firms (‘during 2018’) and
  • to replace the ‘presumption of responsibility’ for senior managers with a ‘duty of responsibility’ i.e. the burden will be upon the regulators to prove that a senior manager has failed to take reasonable steps to prevent regulatory breaches in their area of responsibility.

Please see Regulatory Roundup 69 for further details.

As a reminder, until 2018 the SMR will only be applicable to a ‘relevant authorised person’ which is basically either:

  • a firm with permission to accept deposits or
  • an investment firm that has permission for dealing in investments as principal and, when carried on by it, that activity is a PRA-regulated activity.

Given that the SMR comes into force this coming 7 March, the amendment to the concept of the ‘presumption of responsibility’ (and the associated obligation to notify the regulator if any relevant person has failed to comply with any conduct rules) will require some changes to both the Handbook and relevant forms. With this in mind, the FCA has published CP16/1 “Consequential changes to the Senior Managers Regime”.

Appendix 1 of CP16/1 contains the revised Handbook text and forms. The changes are also set in a handy tabular format in 2.4 (page 7) of the consultation.

The consultation period ends 5 February.