On July 26, the Financial Conduct Authority (FCA) published a consultation paper (CP) outlining proposals to extend the Senior Managers and Certification Regime (SM&CR) to all firms authorized under the UK Financial Services and Markets Act 2000 (FSMA).

The new regime will essentially replace the FCA’s current Approved Persons Regime with a goal of reducing potential harm to consumers and strengthening market integrity. It seeks to encourage a culture of manager-level staff taking personal responsibility and to ensure regulated firms, and all their staff, understand and can determine where responsibility lies.

A baseline of three main requirements will apply to every firm under the FCA’s proposed “core regime”:

  1. Senior Managers Regime (SMR): responsibilities of senior managers are to be clearly delineated by a statement of responsibilities and, should something go wrong in their area, they can be personally held to account. Senior managers are to be individually FCA approved and, as at present, will appear on the FCA Register.
  2. Certification Regime: at least once per year, firms must certify that individuals not within the SMR are suitable to conduct their role based on their fitness, skill and propriety if their role could significantly impact customers, markets or the firm.
  3. Conduct Rules: these will apply to all financial services staff, stipulating that individuals must act with integrity, due care, skill and diligence, be open to and cooperate with regulators, pay due regard to customer interests and treat customers fairly, and observe proper standards of market conduct.

Under the FCA’s proposed “enhanced regime,” additional requirements will apply for the largest and most complex firms (less than 1 percent of regulated firms).

The CP consultation closes November 3.

The CP is available here.