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SM&CR: Reviewing your SM&CR Categorisation

Information for Solo-Regulated Firms: SM&CR Categorisation

12th August 2019

At the start of this month, the FCA updated the information on its website for solo-regulated firms that will come under the Senior Managers and Certification Regime (SM&CR) on 9th December 2019.

As we have written about previously, there are three categories of Firms under SM&CR, these being:

Information on SM&CR Categorisation for Solo-regulated Firms

Firms will, by now, have received notification from the regulator of their intended SM&CR categorisation. In their latest update, the FCA now provides additional information on SM&CR categorisation for solo-regulated firms.

For firms to determine whether their SM&CR categorisation is correct, they will need to know what information the FCA has based their assessment on. Whilst some SM&CR categories are based on a Firm’s permissions or the type of firm, such as sole traders and all limited permission consumer credit firms which are categorised as Limited Scope, other SM&CR categories are based upon the information Firms will have submitted to the FCA via the GABRIEL reporting system.

The FCA advises that if this information in incorrect, then Firms will need to resubmit this data to the FCA as soon as possible in order for the Firm’s SM&CR category to be reassessed.

The regulator advises that there are six thresholds which will result in a firm being classified as Enhanced.  Of these thresholds, four of them are based upon Gabriel returns, specifically the following reports:

Any firm that believes their categorisation is incorrect should review their relevant return and re-submit where necessary.

The other two thresholds  that cause a Firm to be categorised under as an Enhanced firm under SM&CR are being:

Changing your SM&CR category

Whilst it is not possible for Firms to ‘opt-down’ from their assessed SM&CR category, it is possible for firms to choose to be categorised as Enhanced or Core, thus ‘opting up’ rather than being either Core or Limited Scope firms.

Firms that have opted-up may choose to opt-down to their original SM&CR categorisation, but would need to do so before commencement of the SM&CR on 9 December 2019. After commencement of the regime in December Firms that have opted-up can still choose to opt-down however doing so will take effect only 12 months afterwards, during which time the firm must continue to meet the requirements of the SM&CR category they had opted-up to.

The FCA reminds firms that have opted-up into either the Core or Enhanced regimes that they cannot pick and choose which elements of the opted-up regime to implement, instead they must comply with all of the regimes relevant rules as a failure to do so would be a breach of the regulator’s rules.

SM&CR Practial Support

SM&CR will commence for all solo-regulated firms come 9th December 2019. If you are preparing your firm for the extension of the SM&CR regime and need any advice or support, our experienced regulatory consultants would be happy to offer their assistance and practical support. Just drop our friendly team a line to discuss how we can help.

SM&CR Related Reading:

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SM&CR for Solo-Regulated Firms

The Senior Managers & certification Regime will apply to Solo-Regulated Firms from December 2019.




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