New individual accountability regime to come into force on 9 December 2019

4 July 2018


The FCA has at last published its ‘near-final’ rules setting out how solo regulated firms must implement the Senior Managers & Certification Regime. Little has changed from earlier consultation papers and the rules will come into effect from 9 December 2019.The SM&CR is intended to:

  • ensure that firms and staff clearly understand, and can show, who does what
  • encourage staff to take personal responsibility for their actions
  • improve the conduct of staff at all levels within a firm.

Minor changes

Despite having received 272 responses to its consultation, virtually nothing has changed from the FCA’s original consultation papers, other than: the removal of one of the prescribed responsibilities; a subtle refinement to the quantitative thresholds and transitional period that apply to firms becoming an enhanced SM&CR firm; and the introduction of an ‘easy process’ for firms to opt up to become an enhanced firm.

A challenging culture shift

While the obligations for enhanced firms are very similar to those that currently apply to banks, for core and limited firms, the FCA has deliberately minimised the requirements. That said, the personal liability that approved Senior Managers will take on, combined with the potentially career-ending impact that a conduct rule breach may have on members of staff, means that implementation may involve a significant cultural shift for many firms.

New directory to supplement FCA Register

The FCA has also published its proposals to introduce a new public ‘Directory’ of individuals working in financial services in a separate consultation. This Directory will supplement the existing FCA Register and means consumers and firms can verify details of individuals working within financial services firms, including certified individuals, non-senior manager function directors and other individuals in customer-facing roles with qualification requirements.

In our September briefing, we’ll explore the new requirements and outline our thoughts on how firms should prepare for and implement the new regime, as well as likely challenges and sticking points that will need to be addressed. To find out more and register for this event, click here.

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