SM&CR is a GO - but I still have questions?

It's 9 December 2019, and the Senior Managers and Certification Regime (SM&CR) is now officially a ‘GO’. In the past few weeks leading up to ‘GO’ TIME, queries have been rolling in thick and fast, and we have compiled a selection that were more commonly asked and a few that were less so, but all relevant:

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Core or Enhanced?

Q1: My firm is Core but by next year we may fall into the Enhanced category. Shall we opt-up to Enhanced now?

A1: This firm decided to remain Core, to achieve SM&CR compliance by the ‘GO’ date, but has already started working toward Enhanced to get a head start and to avoid the expected time pressures.

Q2: My firm is Core but we feel that many of the SMFs apply to us. Shall we opt-up to Enhanced?

A2: This firm decided to remain Core, but selected the relevant Enhanced SMFs and inserted them into the Other Responsibilities category.

Must we send the Statement of Responsibilities (SoR) to the FCA?

Q1: We have completed our SoRs, do we send them to the FCA?

A1: Individuals must complete their SoRs by the ‘GO’ date, and they must be ready to produce them when requested by the authorities. There is no requirement to submit the SoRs to the FCA on the ‘GO’ date.

Conduct Rules Training

Q1: Do all my employees need to complete the Conduct Rules training by the ‘GO’ date?

A1: Yes & No - Senior Managers and Certification Staff must have completed their Conduct Rules training by the ‘GO’ date. For the other staff (excluding ancillary staff), firms must have processes to comply with the training and reporting requirements on the Conduct Rules by 9 December 2020.

Types of Conduct Rules

Q1: Are the Conduct Rules the same for Senior Managers and for the other staff?

A1: Yes & No - the 5 x Individual Conduct Rules are the same for all staff (excluding ancillary staff) but the Senior Managers have an additional 4 x Conduct Rules that they must adhere to.

Info: See EnOC’s article on Conduct Rules

Ancillary Staff

Q1: Do I determine who my ancillary staff are?

A1: The FCA determines the list of roles that they consider ancillary in Section 11 “Who the Conduct Rules apply to” in their “Guide for FCA solo-regulated firms” of July 2019.

Reporting of Breaches

Q1: Do I report breaches as and when they happen?

A1: Firms will need to report breaches of Conduct Rules resulting in disciplinary action to the FCA every year. However, if the person is a Senior Manager, then it needs to be reported within 7 days.

The FS Register and The Directory

Q1: Must we upload certification details onto The Directory on the ‘GO’ date?

A1: No. FCA solo-regulated firms have until 9 December 2020 to do so. However, the FCA requests that if firms are able to update certification details earlier, then they are encouraged to do so.

Info: See EnOC’s article on The Directory

Keeping things updated, and remaining compliant

Q1: How often must we update our SM&CR files?

A1: The correct and realistic answer is, “All the time”. SM&CR is intended to be living and breathing, embedded into our way of life. Becoming SM&CR ready is not an easy endeavour, but remaining SM&CR compliant may yet prove to be a much more difficult undertaking, and firms must keep both eyes firmly on SM&CR - implementing, monitoring, reviewing and updating - repeat; not just for now, but also well into the future.

Info: See EnOC’s article on efficiency

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Paper and Spreadsheets

Q1: We have attained compliance to SM&CR by the ‘GO’ date, and we have done so by using word processing and spreadsheet software. Do we really need a specialist system?

A1: Whilst specialist systems may not be a requirement, they are massively useful if they can trigger automated alerts and reminders, retain documentation and store evidence, operate paperlessly and easily retrieve data. Specialist systems could be much cheaper than a team of full-time staff, and help avoid potential regulatory fines for errors and omissions.

Info: See EnOC’s article on spreadsheets