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Optimising SM&CR CP19/4

21 January 2019

CP19/4: Optimising the Senior Managers & Certification Regime and feedback to DP16/4 re: Legal Functions

The FCA have today published a Consultation Paper on the Senior Managers & Certification Regime, CP19/4. In addition, within the consultation paper, the FCA provides feedback to their earlier discussion paper (DP16/4) that relates to the overall responsibility of the legal function with reference to SM&CR.

As firms will know, the Senior Managers & Certification Regime (SM&CR) was introduced for banking firms in 2016 and has now been rolled out to insurers in December 2018. SM&CR will become application to all regulated firms from December this year (2019).

Focus of Consultation CP19/4:

Following on from the near-final rules for SM&CR made in July 2018 and those rules issued for insurers in September 2018, the publication of CP19/4 sees the regulator proposing to provide additional clarity on some areas of SM&CR may require it, as well as setting out proposals upon how SM&CR applies to the legal and client dealing functions within firms.

Amongst others, the regulator is proposing changes to the dealing function, as well as looking to include the systems and controls function within the Certfication Regime.

The FCA proposes to amend the scope of the Client Dealing Function in the Certification Regime to allow firms to exclude purely administrative roles that involve ‘taking part in’ investment activities.

The FCA proposes to ensure that the Certification Regime applies to individuals performing roles that were Systems and Controls functions under the Approved Persons Regime, but which are no longer approved under the SM&CR

Following September 2016’s FCA’s Discussion Paper DP16/4 – ‘Overall responsibility and the legal function’, the regulator is proposing to exclude the Legal Function from the Overall Responsibility Requirement.

Next Steps:

Comments on the Consultation should be received by Tuesday 23 April 2019, after which the FCA will consider all comments to the consultation before publishing their feedback and final rules.

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