Q. Now that we are into 2020, can advisers move on from the Senior Managers and Certification Regime?
A. As you may have heard once or twice last year, December 9 2019 saw the implementation of the first stage of the SMCR.
However, as I am sure you are also aware, the introduction of the SMCR was not a one-hit wonder piece of regulation.
What did you need to do before December 9 2019?In addition to the work you have already undertaken to ensure you were fully prepared for December 9 last year, there are also a number of things you need to tackle before December 9 this year and some tasks that you will need to address on an ongoing basis.
So, what did you need to do before December 9 2019?
There are number of decisions that you have already made in relation to SMCR, and changes that have already been put in place.
These were: establishing your company type, identifying senior managers in your company, and allocating all senior managers’ statement of responsibilities, prescribed responsibilities and duty of responsibilities.
You have also been identifying certified persons within your company, and ensuring senior managers and certified persons have completed their conduct rules training.
So what needs to be done going forward?
Last year was only the start of the SMCR journey. There are still a number of requirements you need to observe on an ongoing basis.
These include: gathering evidence to demonstrate senior managers and certified persons are fit and proper for their role; and that they meet requirements of honesty, integrity and reputation, financial soundness and competence and capability.
You also need to assess whether, based on the above evidence, you are happy to issue a certificate to the certified persons within your company.
Please note, this needs to be done before December 9 2020, and then on an annual basis.
Other actions that need to be carried out include ensuring that your recruitment process for new hires includes the request of regulatory reference, self-certified declaration of honesty, integrity and reputation, and credit checks.
Additionally, you need to put in place a training and competency framework for each member of staff, including measurable key performance indicators to assess competence and capability.
Remember, when appointing a new member of staff to a senior manager role, the process is – in a lot of respects – similar to the requirements under the Approved Persons Regime.
However, there are two areas where additional evidence is required as part of a company’s fit and proper assessment: regulatory references and criminal records checks.
A reference must be obtained from the candidate’s current employer, and any other previous employers, covering the previous six years. This should be obtained before the application for approval is submitted to the Financial Conduct Authority.
A criminal record check for spent and unspent convictions is mandatory, and is permitted by statute. This will ensure that the information given to the company and passed onto the regulator is accurate.
While SMCR was not ‘light-touch’ regulation, nor will it be on an ongoing basis, it is worth bearing in mind that a number of these activities replace authorised processes and procedures that have already been in place for years.
However, just because it may not be as hot a topic as it was last year in the press, SMCR is not out of the regulator’s sights, and therefore needs to stay firmly in yours.
Mark Greenwood is director of compliance services at The SimplyBiz Group
