FCA relaxes SMCR rules during pandemic
The Financial Conduct Authority (FCA) has modified its senior manager responsibilities in response to the coronavirus pandemic, relaxing some rules and making temporary adjustments to others.
The regulator said that it does not intend to enforce the requirement for firms to submit updated Statements of Responsibilities (SoRs) if changes have been made to cover “multiple sicknesses, or other temporary changes in responsibilities in direct response to the pandemic”, or if the changes are temporary.
“We do not expect firms to notify us of these temporary arrangements,” said the FCA. “Fixed firms should nevertheless supply the FCA with timely detail of the changes they would normally include in updated SoRs.”
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The City watchdog extended the Senior Managers and Certification Regime (SMCR) to all regulated firms last December, with the aim of protecting consumers and increasing individual accountability.
The modification means that firms – including peer-to-peer lending platforms – can delegate SMCR responsibilities to another member of staff, should the designated senior manager be absent due to illness. While the FCA said it would prefer for those responsibilities to be allocated to another approved senior manager, it is now possible for any suitable individual to cover for a senior manager for 12 weeks without formal approval.
Furthermore, the regulator said that in an effort to “minimise the burden to firms at this time”, they will not be required to submit the updated SoRs of the absent senior manager or of senior managers who take on the responsibilities of the absent manager.
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Although SMCR-approved executives have been classified as key workers in financial services, if these senior managers are furloughed, the manager will retain their approval during their absence and will not need to be re-approved on their return.
“Individuals performing required functions – e.g. compliance oversight, the money laundering reporting officer and the limited scope function – should only be furloughed as a last resort,” said the regulator.
“Where a required function applies to a firm, the firm should replace the furloughed individual until their return. If the replacement is temporary, firms can use the 12-week rule to arrange cover.”
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