Wealth firms with annual revenue of over £35 million will face enhanced controls under the Senior Managers and Certification Scheme (SMCR) in proposals set out by the Financial Conduct Authority (FCA) today.
The regulator wants to automatically convert approved firms at ‘core’, or Cass regulated companies to the new regime next year, but it said enhanced firms will need to submit a ‘conversion notification and accompanying documents’.
In a consultation paper, ‘Individual Accountability: Transitioning FCA firms and individuals to the Senior Managers and Certification Scheme’, published this morning, the FCA also acknowledged the
‘We have listened to this feedback and are considering next steps as part of our preparations to implement the new regime,’ the regulator said.
SMCR was introduced for the banking sector in March 2016 and its scope is set to be broadened to cover the whole regulated industry from an as yet unspecified date next year, making individuals accountable for company failures.
For so-called core firms, no extra checks will be required for individuals transitioning over to the new regime, which will be carried out automatically. The one exception to this is non-executive chairmen, for whom their companies will have to give notice of their intention to move them over to SMCR, but all other non-executive directors will not fall under the regime. Executive chairmen will be transitioned automatically,
For enhanced firms, the procedure will be more onerous. Companies will be required to tell the regulator who they want to assign the SMCR functions to, but they will not need to reapply. Firms will also need to provide a ‘responsibilities map’, outlining who is in charge of which function within the business.
A company failing to submit conversion notifications will be in breach of its regulatory requirements and could potentially face enforcement action.
The FCA added that it has used gender neutral job titles in the SMCR and the consultation is set to run until 21 February.