Telephone 020 3813 2890 for a free no obligation chat about your regulatory requirements with one of our compliance consultants.

© Compound Growth Limited 2012 - 2018 | Terms of Use

Registered in England and Wales as limited company number 07626537 - Registered Office 120 Pall Mall, London, SW1Y 5EA

We use cookies, if you consent to this use, please continue to browse our site.

Here to help with Regulation and Compliance

Compound Growth

FCA Regulatory News: SMR - Individuals with Legal Functions

29th January 2016

FCA clarifies supervisory intentions for those with legal functions under the Senior Managers Regime

The FCA issued a statement this week clarifying to firms affected by the Senior Managers Regime how individuals undertaking legal functions within firms should be treated.

The final rules on individual accountability were issued six months ago in July 2015, however it has since become clear that there is some uncertainty within the industry as to whether those individuals responsible for a firm’s legal function would require approval under the Senior Managers Regime when it comes into effect in March.

At the time the Financial Conduct Authority issued the final SMR rules they advised that firms would need to identify those individuals within their firm that had overall responsibility for activities, functions or areas of the business and that these individuals would need to be pre-approved for Senior Management Functions (SMFs) as well as other identifying other individuals holding an ‘overall responsibility’ for which a specific SMF may not be prescribed. To assist firms, a non-exhaustive list of example job responsibilities and functions was published, however a firm’s ‘legal function’ was not included.

FCA Clarifies their Supervisory Intentions

The regulator has confirmed that the indicative list of roles was not exhaustive and that “responsibility for the management of the legal function was not excluded”.

The FCA expected that “many firms would need to identify the role as an overall responsibility SMF when allocating senior management responsibilities if it was not covered by another specific SMF in the firm”.

However, as it is now clear that some confusion exists with regards to how firms have treated their legal function, the regulator now plans to consult upon the pros and cons of including the Legal Function within the SMR and seek the opinion of industry participants.

“if individuals are approved for the role, we know that some industry participants are concerned about a possible perception that a General Counsel might be required or pressured by regulators to disclose privileged information. We recognise both that uncertainty exists and that there is a need to consider the range of views as to what the scope of the regime should be in this particular area”

FCA Statement, 27Jan16

Since there is just over one month until the Senior Manager’s Regime is to take effect, there will be insufficient time to consult upon the subject before the regime takes effect, thus the regulator has made it clear that in the interim, if firms have made decisions in good faith about whether an individual requires approval or not then they should not need to change their approach.

Once the FCA have consulted upon the matter, the requirements for firms in this area will be made clear.

SMR: Individuals with Legal Functions

News & Views

‘Overall Responsibility’

A person who has “ultimate responsibility, under the governing body, for managing or supervising a function; with direct responsibility for reporting to the governing body, and putting matters for decision to it.”

Financial Conduct Authority,

CP 15-22 July 2015

Other Relevant Reading on-site:

SMR Effective Date

The Senior Managers Regime will be effective for some sectors in March 2016.




Contact Us