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10 things insurancedistributors need to knowabout the ExtendedSenior Managers andCertification Regime(“SMCR”)September 2017



LDN_IT/DPC/NC02

10 things insurancedistributors need to knowabout the ExtendedSenior Managers andCertification Regime

LDN_IT/DPC/NC02 TRWO(LDNW37383)

10 things insurancedistributors need to knowabout the ExtendedSenior Managers andCertification Regime

TRWO(LDNW37383) 1

distributors need to know

Senior Managers and

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LDN_IT/DPC/NC02 TRWO(LDNW37383) B_LIVE_EMEA1:4495175v2

LDN_IT/DPC/NC02 TRWO(LDNW37383) B_LIVE_EMEA1:4495175v2

Contents

When will the extended regime apply to FCA solo-regulated financial servicesfirms? ............................................................................................................................................................ 1

What are the main elements of the SMCR? .............................................................................. 1

Will there be different requirements for different types of FCA solo-regulatedfirm? ............................................................................................................................................................ 1

How do I know whether my firm is a Core SMCR Firm or an Enhanced SMCRFirm? ............................................................................................................................................................ 2

What are the differences between the extended SMCR regime and the currentSMCR regime which already applies to banks/SIMR regime which already appliesto insurers?................................................................................................................................................. 3

How does the extended regime apply if my firm is structured as a partnership? .. 5

Are there any specified Senior Manager positions which must be filled and/orspecific responsibilities which must be allocated? ................................................................. 6

What is the “Duty of Responsibility” for Senior Managers? .............................................. 6

What is the territorial applicability of the regime? What if my firm is a UK branchof an overseas firm? .............................................................................................................................. 6

What should I do now?........................................................................................................................ 7

ANNEX 1 – Senior Management Functions............................................................................... 9

ANNEX 2 – List of Prescribed Responsibilities ........................................................................11

ANNEX 3 – Conduct Rules................................................................................................................12

Contacts ....................................................................................................................................................13

When will the extended regime apply to FCA solo

The date for implementation of the (extended) regime is expected to be “fromproposed rules will close on 03 November 2017 with the final rules expected in Summer 2018. We thenexpect a phased implementation from late 2018. The FCA has said that it will, separately, consult on theoperational aspects othe need for firms and individuals to apply for new approval as a Senior Manager if they are already anApproved Person).

What are the main elements of the SMCR?

There are three main elements to the SMCR:

Senior Managers RegimeManagement Function (an SMF) will require FCA approval (much in the same way that existing ApprovedPersons doto the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibilitywithin the firm (and will include certain “Prescriberequired to allocate amongst their Senior Manager population). Firms will need to tell the FCA wheneverthere is a material change to a Senior Manager’s Statement of Responsibilities. Every Senior Maalso be subject to a “duty of responsibility”goes wrong, the FCA will consider whether or not the Senior Manager took “reasonable steps” to stop thisfrom happening.

Certification Regipotentially having a big impact on customers, markets or the firm itself. Some of these roles arecontrolled functions under the Approved Persons Regime (including, withocustomer function). The FCA will no longer approve this category of personnelfirms themselves to determine who takes up these roles and “certify” that individuals are fit and proper(at the point of recrui

Conduct Rulesservices“ancillaryPrinciple, although there are a few key differences.

Will there be different requirements for different types of FCA solo

Yes. The regime wilThe FCA proposes that the SMCR will apply differently to three categories of firm:

Core SMCR Firmsbaseline of SMCR requirements.

Enhanced SMCR Firmsfirms whose “size, complexity and potential impact on consumers warrant more attention” (likely toincludidentifying enhanced firms (which includes existing definitions in the FCA Rules):


The date for implementation of the (extended) regime is expected to be “fromproposed rules will close on 03 November 2017 with the final rules expected in Summer 2018. We thenexpect a phased implementation from late 2018. The FCA has said that it will, separately, consult on theoperational aspects othe need for firms and individuals to apply for new approval as a Senior Manager if they are already anApproved Person).


re are three main elements to the SMCR:

Senior Managers RegimeManagement Function (an SMF) will require FCA approval (much in the same way that existing ApprovedPersons do today). Each Senior Manager will be required to sign (and the firm will be required to submitto the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibilitywithin the firm (and will include certain “Prescriberequired to allocate amongst their Senior Manager population). Firms will need to tell the FCA wheneverthere is a material change to a Senior Manager’s Statement of Responsibilities. Every Senior Maalso be subject to a “duty of responsibility”goes wrong, the FCA will consider whether or not the Senior Manager took “reasonable steps” to stop thisfrom happening.

Certification Regimepotentially having a big impact on customers, markets or the firm itself. Some of these roles arecontrolled functions under the Approved Persons Regime (including, withocustomer function). The FCA will no longer approve this category of personnelfirms themselves to determine who takes up these roles and “certify” that individuals are fit and proper(at the point of recrui

Conduct Rules: These are basic rules that will apply to almost every person who works in financialservices– not just Senior Managers and Certification Regime staff, but also other staff (except certain“ancillary staff” as defined in the rules). The Conduct Rules broadly mirror the current APER Statements ofPrinciple, although there are a few key differences.


Yes. The regime will apply proportionately according to the size of the firm and the nature of its business.The FCA proposes that the SMCR will apply differently to three categories of firm:

Core SMCR Firms: Most FCA solobaseline of SMCR requirements.

Enhanced SMCR Firmsfirms whose “size, complexity and potential impact on consumers warrant more attention” (likely toinclude less than 1% of firms). This is known as the ‘enhanced regime’. The FCA proposes six criteria foridentifying enhanced firms (which includes existing definitions in the FCA Rules):

A firm that is a Significant IFPRU firm

A firm that is a CASS Large fir

Firms with assets under management of £50bn or more (at any time in the previous 3 years)

Firms with total intermediary regulated business revenue of £35m or more per annum


The date for implementation of the (extended) regime is expected to be “fromproposed rules will close on 03 November 2017 with the final rules expected in Summer 2018. We thenexpect a phased implementation from late 2018. The FCA has said that it will, separately, consult on theoperational aspects of the new rules, including how firms will transition into the regime (this should minimisethe need for firms and individuals to apply for new approval as a Senior Manager if they are already an



Senior Managers Regime : This is relevant to senior individuals who run firms. Anyone who holds a SeniorManagement Function (an SMF) will require FCA approval (much in the same way that existing Approved

today). Each Senior Manager will be required to sign (and the firm will be required to submitto the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibilitywithin the firm (and will include certain “Prescriberequired to allocate amongst their Senior Manager population). Firms will need to tell the FCA wheneverthere is a material change to a Senior Manager’s Statement of Responsibilities. Every Senior Maalso be subject to a “duty of responsibility”goes wrong, the FCA will consider whether or not the Senior Manager took “reasonable steps” to stop this

me: This covers people who are not Senior Managers, but whose job the FCA regards aspotentially having a big impact on customers, markets or the firm itself. Some of these roles arecontrolled functions under the Approved Persons Regime (including, withocustomer function). The FCA will no longer approve this category of personnelfirms themselves to determine who takes up these roles and “certify” that individuals are fit and proper(at the point of recruitment and on an annual basis thereafter).

: These are basic rules that will apply to almost every person who works in financialnot just Senior Managers and Certification Regime staff, but also other staff (except certainstaff” as defined in the rules). The Conduct Rules broadly mirror the current APER Statements of

Principle, although there are a few key differences.


l apply proportionately according to the size of the firm and the nature of its business.The FCA proposes that the SMCR will apply differently to three categories of firm:

: Most FCA solobaseline of SMCR requirements.

Enhanced SMCR Firms: The FCA proposes to apply additional requirements to those FCA solofirms whose “size, complexity and potential impact on consumers warrant more attention” (likely to

e less than 1% of firms). This is known as the ‘enhanced regime’. The FCA proposes six criteria foridentifying enhanced firms (which includes existing definitions in the FCA Rules):


A firm that is a CASS Large fir




The date for implementation of the (extended) regime is expected to be “fromproposed rules will close on 03 November 2017 with the final rules expected in Summer 2018. We thenexpect a phased implementation from late 2018. The FCA has said that it will, separately, consult on the

f the new rules, including how firms will transition into the regime (this should minimisethe need for firms and individuals to apply for new approval as a Senior Manager if they are already an



: This is relevant to senior individuals who run firms. Anyone who holds a SeniorManagement Function (an SMF) will require FCA approval (much in the same way that existing Approved

today). Each Senior Manager will be required to sign (and the firm will be required to submitto the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibilitywithin the firm (and will include certain “Prescriberequired to allocate amongst their Senior Manager population). Firms will need to tell the FCA wheneverthere is a material change to a Senior Manager’s Statement of Responsibilities. Every Senior Maalso be subject to a “duty of responsibility”goes wrong, the FCA will consider whether or not the Senior Manager took “reasonable steps” to stop this

: This covers people who are not Senior Managers, but whose job the FCA regards aspotentially having a big impact on customers, markets or the firm itself. Some of these roles arecontrolled functions under the Approved Persons Regime (including, withocustomer function). The FCA will no longer approve this category of personnelfirms themselves to determine who takes up these roles and “certify” that individuals are fit and proper

tment and on an annual basis thereafter).





: Most FCA solo-regulated firms will be subject to the ‘core regimebaseline of SMCR requirements.

: The FCA proposes to apply additional requirements to those FCA solofirms whose “size, complexity and potential impact on consumers warrant more attention” (likely to



A firm that is a CASS Large firm



1






today). Each Senior Manager will be required to sign (and the firm will be required to submitto the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibilitywithin the firm (and will include certain “Prescribed Responsibilities” mandated by the FCA that firms arerequired to allocate amongst their Senior Manager population). Firms will need to tell the FCA wheneverthere is a material change to a Senior Manager’s Statement of Responsibilities. Every Senior Maalso be subject to a “duty of responsibility” – a statutory duty under FSMA which means that if somethinggoes wrong, the FCA will consider whether or not the Senior Manager took “reasonable steps” to stop this







regulated firms will be subject to the ‘core regime





When will the extended regime apply to FCA solo-regulated financial services firms?




today). Each Senior Manager will be required to sign (and the firm will be required to submitto the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibility

d Responsibilities” mandated by the FCA that firms arerequired to allocate amongst their Senior Manager population). Firms will need to tell the FCA wheneverthere is a material change to a Senior Manager’s Statement of Responsibilities. Every Senior Ma

a statutory duty under FSMA which means that if somethinggoes wrong, the FCA will consider whether or not the Senior Manager took “reasonable steps” to stop this











regulated financial services firms?

The date for implementation of the (extended) regime is expected to be “from 2018”. Consultation on theproposed rules will close on 03 November 2017 with the final rules expected in Summer 2018. We thenexpect a phased implementation from late 2018. The FCA has said that it will, separately, consult on the






: This covers people who are not Senior Managers, but whose job the FCA regards aspotentially having a big impact on customers, markets or the firm itself. Some of these roles arecontrolled functions under the Approved Persons Regime (including, without limitation, the CF30customer function). The FCA will no longer approve this category of personnel –firms themselves to determine who takes up these roles and “certify” that individuals are fit and proper









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2018”. Consultation on theproposed rules will close on 03 November 2017 with the final rules expected in Summer 2018. We thenexpect a phased implementation from late 2018. The FCA has said that it will, separately, consult on the






: This covers people who are not Senior Managers, but whose job the FCA regards aspotentially having a big impact on customers, markets or the firm itself. Some of these roles are

ut limitation, the CF30– rather, it will be for

firms themselves to determine who takes up these roles and “certify” that individuals are fit and proper


Will there be different requirements for different types of FCA solo-regulated firm?

l apply proportionately according to the size of the firm and the nature of its business.

regulated firms will be subject to the ‘core regime’, which comprises a

: The FCA proposes to apply additional requirements to those FCA solo-firms whose “size, complexity and potential impact on consumers warrant more attention” (likely to






2018”. Consultation on theproposed rules will close on 03 November 2017 with the final rules expected in Summer 2018. We thenexpect a phased implementation from late 2018. The FCA has said that it will, separately, consult on the




d Responsibilities” mandated by the FCA that firms arerequired to allocate amongst their Senior Manager population). Firms will need to tell the FCA wheneverthere is a material change to a Senior Manager’s Statement of Responsibilities. Every Senior Manager will


: This covers people who are not Senior Managers, but whose job the FCA regards aspotentially having a big impact on customers, markets or the firm itself. Some of these roles are

ut limitation, the CF30rather, it will be for

firms themselves to determine who takes up these roles and “certify” that individuals are fit and proper


regulated firm?

l apply proportionately according to the size of the firm and the nature of its business.

’, which comprises a

-regulatedfirms whose “size, complexity and potential impact on consumers warrant more attention” (likely to

e less than 1% of firms). This is known as the ‘enhanced regime’. The FCA proposes six criteria for



to the FCA) a Statement of Responsibilities. This document sets out an individual’s areas of responsibility


staff” as defined in the rules). The Conduct Rules broadly mirror the current APER Statements of

Based on the above criteria, the test which seems most likely to apply to insurance intermediaries will be theintermediary regulated business revenue threshold of £35m or moreconfirmed by the FCA. It is also not clear, given that the current test used is the revenue threshold of £35m ormore relating to retail premiums, if and how this test will apply to commercial brokers.

Once a firm meetscertain proposed transitional periods that may apply when moving (either way) between the ‘core regime’ andthe ‘enhanced regime’criteria above, the FCA proposes to allow that firm 6 months from the date it meets the criteria to complywith the requirements of the ‘enhanced regime’).

Limited Scope Firmsknown as Limited Scope Firms. These are, broadly speaking, firms that currently only need to have FCAapproval for certain controlled functions and include (among others): Limited Permission ConsumerCredit Firms, sole traders, internally managed AIFs and smaller insurance intermediaries whose principalbusiness is not insurance intermediation and who only have permission to carry on insurance mediationactivity in relation to non

How do I know whether my firm is a Core SMCR Firm or an Enhanced SMCR Firm?

The criteria mentioned in question 3 (above) stems from a mixture of existing regulatory definitions andquantitative thresholds defined by reference to what a firm submits in its regulatory returns. A “SignificantIFPRU Firm” is defined in the FCA RulesLarge Firm” is defined in the table in CASS 1A.2.7R as a firm holding a total amount of client money, in its lastcalendar year (or as the case may be that it projects that it will hold>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or asthe case may be that it projects that it will hold during the current calendar year) of >£100billion.

The other “quantitative” criteria are calculated in accordance with various (existing) regulatory reportingrequirements:

For the assets under management criteriathe methodology the firm uses

For the total intermediary regulated business revenue criteriawith the methodology used to calculate total regulated business revenue in the RMAR (the RetailMediation Activities Return). As set out above, at this current time this is the criteria of most relevance toinsurance intermediaries. It is currently expected that approximately 75 intermediary firms will bedesignated aswhether the revenue threshold of £35m per annum will apply to those intermediaries which deal incommercial business.

If the same revenue threshold is applied to commercial insurance brokers it is likfirms will fall within the scope of anGiven the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reducethe risk of pbrokers to have to meet alternative criteria to be designated as ana response on behalf of clients as part of the consutherefore welcome any comments on this matter.

For the annual regulated revenue generated by consumer credit lending criteriacalculated by adding together each amount recorded in the “the CCR002 (Consumer Credit data: Volumes).

Firms with annual regulated revenue generated by consumer credit lending of £100m

Mortgage lenders with 10,000 or more regulated mortgages outstanding.


Once a firm meets the relevant criteria, the ‘enhanced regime’ would apply to them automatically (subject tocertain proposed transitional periods that may apply when moving (either way) between the ‘core regime’ andthe ‘enhanced regime’criteria above, the FCA proposes to allow that firm 6 months from the date it meets the criteria to complywith the requirements of the ‘enhanced regime’).

Limited Scope Firmsknown as Limited Scope Firms. These are, broadly speaking, firms that currently only need to have FCAapproval for certain controlled functions and include (among others): Limited Permission ConsumerCredit Firms, sole traders, internally managed AIFs and smaller insurance intermediaries whose principalbusiness is not insurance intermediation and who only have permission to carry on insurance mediationactivity in relation to non



The other “quantitative” criteria are calculated in accordance with various (existing) regulatory reportingrequirements:


For the total intermediary regulated business revenue criteriawith the methodology used to calculate total regulated business revenue in the RMAR (the Retail

diation Activities Return). As set out above, at this current time this is the criteria of most relevance toinsurance intermediaries. It is currently expected that approximately 75 intermediary firms will bedesignated as Enhanced SMCR Firmswhether the revenue threshold of £35m per annum will apply to those intermediaries which deal incommercial business.

If the same revenue threshold is applied to commercial insurance brokers it is likfirms will fall within the scope of anGiven the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reducethe risk of poor consumer outcomes in the retail investment marketbrokers to have to meet alternative criteria to be designated as ana response on behalf of clients as part of the consutherefore welcome any comments on this matter.





the relevant criteria, the ‘enhanced regime’ would apply to them automatically (subject tocertain proposed transitional periods that may apply when moving (either way) between the ‘core regime’ andthe ‘enhanced regime’ – for example, if a firm in the ‘ccriteria above, the FCA proposes to allow that firm 6 months from the date it meets the criteria to complywith the requirements of the ‘enhanced regime’).

Limited Scope Firms: There will be a reduced setknown as Limited Scope Firms. These are, broadly speaking, firms that currently only need to have FCAapproval for certain controlled functions and include (among others): Limited Permission ConsumerCredit Firms, sole traders, internally managed AIFs and smaller insurance intermediaries whose principalbusiness is not insurance intermediation and who only have permission to carry on insurance mediationactivity in relation to non-investment insurance



The other “quantitative” criteria are calculated in accordance with various (existing) regulatory reporting



diation Activities Return). As set out above, at this current time this is the criteria of most relevance toinsurance intermediaries. It is currently expected that approximately 75 intermediary firms will be

Enhanced SMCR Firmswhether the revenue threshold of £35m per annum will apply to those intermediaries which deal incommercial business.

If the same revenue threshold is applied to commercial insurance brokers it is likfirms will fall within the scope of anGiven the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reduce

oor consumer outcomes in the retail investment marketbrokers to have to meet alternative criteria to be designated as ana response on behalf of clients as part of the consutherefore welcome any comments on this matter.





the relevant criteria, the ‘enhanced regime’ would apply to them automatically (subject tocertain proposed transitional periods that may apply when moving (either way) between the ‘core regime’ and

for example, if a firm in the ‘ccriteria above, the FCA proposes to allow that firm 6 months from the date it meets the criteria to complywith the requirements of the ‘enhanced regime’).

: There will be a reduced setknown as Limited Scope Firms. These are, broadly speaking, firms that currently only need to have FCAapproval for certain controlled functions and include (among others): Limited Permission ConsumerCredit Firms, sole traders, internally managed AIFs and smaller insurance intermediaries whose principalbusiness is not insurance intermediation and who only have permission to carry on insurance mediation

investment insurance


The criteria mentioned in question 3 (above) stems from a mixture of existing regulatory definitions andquantitative thresholds defined by reference to what a firm submits in its regulatory returns. A “SignificantIFPRU Firm” is defined in the FCA Rules at IFPRU 1.2.3R (by reference to various threshold tests) and a “CASSLarge Firm” is defined in the table in CASS 1A.2.7R as a firm holding a total amount of client money, in its lastcalendar year (or as the case may be that it projects that it will hold>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or asthe case may be that it projects that it will hold during the current calendar year) of >£100billion.


For the assets under management criteria –the methodology the firm uses to submit FSA038 (Volumes and Type of Business).



Enhanced SMCR Firms. It is not cwhether the revenue threshold of £35m per annum will apply to those intermediaries which deal in

If the same revenue threshold is applied to commercial insurance brokers it is likfirms will fall within the scope of an Enhanced SMCR FirmGiven the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reduce

oor consumer outcomes in the retail investment marketbrokers to have to meet alternative criteria to be designated as ana response on behalf of clients as part of the consutherefore welcome any comments on this matter.


2





for example, if a firm in the ‘core regime’ develops such that it meets one of thecriteria above, the FCA proposes to allow that firm 6 months from the date it meets the criteria to complywith the requirements of the ‘enhanced regime’).

: There will be a reduced set of requirements for a specific group of smaller firms,known as Limited Scope Firms. These are, broadly speaking, firms that currently only need to have FCAapproval for certain controlled functions and include (among others): Limited Permission ConsumerCredit Firms, sole traders, internally managed AIFs and smaller insurance intermediaries whose principalbusiness is not insurance intermediation and who only have permission to carry on insurance mediation

investment insurance contracts.


The criteria mentioned in question 3 (above) stems from a mixture of existing regulatory definitions andquantitative thresholds defined by reference to what a firm submits in its regulatory returns. A “Significant

at IFPRU 1.2.3R (by reference to various threshold tests) and a “CASSLarge Firm” is defined in the table in CASS 1A.2.7R as a firm holding a total amount of client money, in its lastcalendar year (or as the case may be that it projects that it will hold>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or asthe case may be that it projects that it will hold during the current calendar year) of >£100billion.


– assets under management are calculated in accordance withto submit FSA038 (Volumes and Type of Business).



. It is not clear however from the FCA Consultation Paper (CP17/25)whether the revenue threshold of £35m per annum will apply to those intermediaries which deal in

If the same revenue threshold is applied to commercial insurance brokers it is likEnhanced SMCR Firm. Accordingly the figure of 75 seems rather low.

Given the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reduceoor consumer outcomes in the retail investment market

brokers to have to meet alternative criteria to be designated as ana response on behalf of clients as part of the consultation process and raising this particular issue; wetherefore welcome any comments on this matter.




Based on the above criteria, the test which seems most likely to apply to insurance intermediaries will be theintermediary regulated business revenue threshold of £35m or more per annum. However this has not beenconfirmed by the FCA. It is also not clear, given that the current test used is the revenue threshold of £35m ormore relating to retail premiums, if and how this test will apply to commercial brokers.


ore regime’ develops such that it meets one of thecriteria above, the FCA proposes to allow that firm 6 months from the date it meets the criteria to comply

of requirements for a specific group of smaller firms,known as Limited Scope Firms. These are, broadly speaking, firms that currently only need to have FCAapproval for certain controlled functions and include (among others): Limited Permission ConsumerCredit Firms, sole traders, internally managed AIFs and smaller insurance intermediaries whose principalbusiness is not insurance intermediation and who only have permission to carry on insurance mediation

contracts.



at IFPRU 1.2.3R (by reference to various threshold tests) and a “CASSLarge Firm” is defined in the table in CASS 1A.2.7R as a firm holding a total amount of client money, in its lastcalendar year (or as the case may be that it projects that it will hold during the current calendar year) of>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or asthe case may be that it projects that it will hold during the current calendar year) of >£100billion.


assets under management are calculated in accordance withto submit FSA038 (Volumes and Type of Business).

For the total intermediary regulated business revenue criteria – total revenue is calculated in accordancewith the methodology used to calculate total regulated business revenue in the RMAR (the Retail


lear however from the FCA Consultation Paper (CP17/25)whether the revenue threshold of £35m per annum will apply to those intermediaries which deal in

If the same revenue threshold is applied to commercial insurance brokers it is lik. Accordingly the figure of 75 seems rather low.

Given the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reduceoor consumer outcomes in the retail investment market – it would seem sensible for commercial

brokers to have to meet alternative criteria to be designated as an Enhanced SMCR Firmltation process and raising this particular issue; we

For the annual regulated revenue generated by consumer credit lending criteriacalculated by adding together each amount recorded in the “revenue” column of the lending section to



Based on the above criteria, the test which seems most likely to apply to insurance intermediaries will be theper annum. However this has not been

confirmed by the FCA. It is also not clear, given that the current test used is the revenue threshold of £35m ormore relating to retail premiums, if and how this test will apply to commercial brokers.






at IFPRU 1.2.3R (by reference to various threshold tests) and a “CASSLarge Firm” is defined in the table in CASS 1A.2.7R as a firm holding a total amount of client money, in its last

during the current calendar year) of>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or asthe case may be that it projects that it will hold during the current calendar year) of >£100billion.



total revenue is calculated in accordancewith the methodology used to calculate total regulated business revenue in the RMAR (the Retail



If the same revenue threshold is applied to commercial insurance brokers it is likely many more intermediary. Accordingly the figure of 75 seems rather low.

Given the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reduceit would seem sensible for commercial

Enhanced SMCR Firmltation process and raising this particular issue; we

For the annual regulated revenue generated by consumer credit lending criteria –revenue” column of the lending section to


Firms with annual regulated revenue generated by consumer credit lending of £100m or more


confirmed by the FCA. It is also not clear, given that the current test used is the revenue threshold of £35m ormore relating to retail premiums, if and how this test will apply to commercial brokers.







during the current calendar year) of>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or asthe case may be that it projects that it will hold during the current calendar year) of >£100billion.






ely many more intermediary. Accordingly the figure of 75 seems rather low.


Enhanced SMCR Firm. We will be submittingltation process and raising this particular issue; we

– the revenue isrevenue” column of the lending section to


or more


confirmed by the FCA. It is also not clear, given that the current test used is the revenue threshold of £35m or







during the current calendar year) of>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or as


assets under management are calculated in accordance with




ely many more intermediary. Accordingly the figure of 75 seems rather low.


. We will be submittingltation process and raising this particular issue; we

the revenue isrevenue” column of the lending section to


confirmed by the FCA. It is also not clear, given that the current test used is the revenue threshold of £35m or

certain proposed transitional periods that may apply when moving (either way) between the ‘core regime’ and

>£1billion and/or is a firm holding a total value of safe custody assets during the firm’s last calendar year (or as

diation Activities Return). As set out above, at this current time this is the criteria of most relevance to

Given the FCA has stated in the past that the RMAR is an important part of its supervisory approach to reduce

. We will be submitting

For the mortgage lenders with >10,000 outstanding regulated mortgagesamounts set out in rows E4.5 and G1.1(d) of the MLAR (the Mortgage LReturn).

The flowchart below is a simplified overview for checking which type of SMCR firm your firm is:

Please see above clarification for insurance intermediarie

What are the differences between the extended SMapplies to banks/SIMR regime which already applies to insurers

Senior Managers Regime

Under the existing SMCR for banks, there are a total of 22 Senifrom SMF1 to 24 (some functions having been removed and/oinsurers, there are a total of 16 Senior Insurance Management25 (some functions have been numbered in line with

Under the extended regime, the FCA proposes a reduced set oThese SMFs include the Chief Executive (SMF1), Executive DireOversight (SMF16), MoneyFunction (SMF29). This reflects some of the SMFs under the bPartner (SMF27) and Limited Scope Function (SMF29)). Curiouto banking firms, whilst at the same time acknowledging that npartnerships. Core SMCR Firms will also be required to allocateSenior Manage

Unlike the banks and insurers,

prepare a “Responsibilities Map”management/governance arrestablish who in a firm is responsible for what;

implement “handover procedures” for Senior Managersnew Senior Manager has to h

For the mortgage lenders with >10,000 outstanding regulated mortgagesamounts set out in rows E4.5 and G1.1(d) of the MLAR (the Mortgage LReturn).




Senior Managers Regime


Under the extended regime, the FCA proposes a reduced set oThese SMFs include the Chief Executive (SMF1), Executive DireOversight (SMF16), MoneyFunction (SMF29). This reflects some of the SMFs under the bPartner (SMF27) and Limited Scope Function (SMF29)). Curiouto banking firms, whilst at the same time acknowledging that npartnerships. Core SMCR Firms will also be required to allocateSenior Manager population. These are set out in Annex 2 to th

Unlike the banks and insurers,

prepare a “Responsibilities Map”management/governance arrestablish who in a firm is responsible for what;

implement “handover procedures” for Senior Managersnew Senior Manager has to h

For the mortgage lenders with >10,000 outstanding regulated mortgagesamounts set out in rows E4.5 and G1.1(d) of the MLAR (the Mortgage L




Senior Managers Regime LDN_IT/DPC/NC02


Under the extended regime, the FCA proposes a reduced set oThese SMFs include the Chief Executive (SMF1), Executive DireOversight (SMF16), Money Laundering Reporting Officer (SMF1Function (SMF29). This reflects some of the SMFs under the bPartner (SMF27) and Limited Scope Function (SMF29)). Curiouto banking firms, whilst at the same time acknowledging that npartnerships. Core SMCR Firms will also be required to allocate

r population. These are set out in Annex 2 to th

Unlike the banks and insurers, Core SMCR Firms

prepare a “Responsibilities Map”management/governance arrangements and is filed with testablish who in a firm is responsible for what;

implement “handover procedures” for Senior Managersnew Senior Manager has to hand when replacing a predec





LDN_IT/DPC/NC02


Under the extended regime, the FCA proposes a reduced set oThese SMFs include the Chief Executive (SMF1), Executive Dire

Laundering Reporting Officer (SMF1Function (SMF29). This reflects some of the SMFs under the bPartner (SMF27) and Limited Scope Function (SMF29)). Curiouto banking firms, whilst at the same time acknowledging that npartnerships. Core SMCR Firms will also be required to allocate


Core SMCR Firms

prepare a “Responsibilities Map” – this is a single documenangements and is filed with t

establish who in a firm is responsible for what;

implement “handover procedures” for Senior Managersand when replacing a predec

3




What are the differences between the extended SMCR regimeapplies to banks/SIMR regime which already applies to insurers

LDN_IT/DPC/NC02

Under the existing SMCR for banks, there are a total of 22 Senifrom SMF1 to 24 (some functions having been removed and/oinsurers, there are a total of 16 Senior Insurance Management25 (some functions have been numbered in line with the bank




Core SMCR Firms will likely not be

this is a single documenangements and is filed with t

establish who in a firm is responsible for what;

implement “handover procedures” for Senior Managersand when replacing a predec




CR regimeapplies to banks/SIMR regime which already applies to insurers

Under the existing SMCR for banks, there are a total of 22 Senifrom SMF1 to 24 (some functions having been removed and/oinsurers, there are a total of 16 Senior Insurance Management

the bank




will likely not be


implement “handover procedures” for Senior Managers –and when replacing a predec

For the mortgage lenders with >10,000 outstanding regulated mortgages – adding together the variousamounts set out in rows E4.5 and G1.1(d) of the MLAR (the Mortgage Lending and Administration


CR regime


the bank




will likely not be


adding together the variousending and Administration


CR regime



Laundering Reporting Officer (SMF1Function (SMF29). This reflects some of the SMFs under the b

to banking firms, whilst at the same time acknowledging that npartnerships. Core SMCR Firms will also be required to allocate


adding together the variousending and Administration

CR regime


These SMFs include the Chief Executive (SMF1), Executive DireLaundering Reporting Officer (SMF1

Function (SMF29). This reflects some of the SMFs under the b

to banking firms, whilst at the same time acknowledging that npartnerships. Core SMCR Firms will also be required to allocate

angements and is filed with t

Function (SMF29). This reflects some of the SMFs under the b

s.

?

or Management Functions (SMFs), number replaced). Under the existing SIMR forFunctions (SIMFs), numbered from SIMF1 to

f SMFs that will apply toctor (SMF3), Chair (SMF9), Compliance

anking and SIMFs under the SIMR (save for thesly however,o banking firms are currently set up as7 Prescribed Responsibilities amongst their

s.

?


f SMFs that will apply toctor (SMF3), Chair (SMF9), Compliance

anking and SIMFs under the SIMR (save for thesly however,o banking firms are currently set up as7 Prescribed Responsibilities amongst theiris Briefing Note.

s.

?


f SMFs that will apply toctor (SMF3), Chair (SMF9), Compliance7), Partner (SMF27) and the Limited Scope


he FCA so that the regulator can, at a glance,

essor; or

s.

?




t setting out the firm’she FCA so that the regulator can, at a glance,

essor; or

s.

and the current SMCR regime which already?

or Management Functions (SMFs), number replaced). Under the existing SIMR forFunctions (SIMFs), numbered from SIMF1 toing SMFs).



required to:


essor; or

s.

and the current SMCR regime which already?




required to:


i.e., a policy for determining what information aessor; or

and the current SMCR regime which already



anking and SIMFs under the SIMR (save for thesly however, the FCA proposes to apply SMF27o banking firms are currently set up as7 Prescribed Responsibilities amongst theiris Briefing Note.

required to:


i.e., a policy for determining what information a




f SMFs that will apply to Core SMCR Firmsctor (SMF3), Chair (SMF9), Compliance7), Partner (SMF27) and the Limited Scope

anking and SIMFs under the SIMR (save for thethe FCA proposes to apply SMF27

o banking firms are currently set up as7 Prescribed Responsibilities amongst their





or Management Functions (SMFs), numberedr replaced). Under the existing SIMR forFunctions (SIMFs), numbered from SIMF1 to

Core SMCR Firms.ctor (SMF3), Chair (SMF9), Compliance7), Partner (SMF27) and the Limited Scope


o banking firms are currently set up as7 Prescribed Responsibilities amongst their

he FCA so that the regulator can, at a glance,





ensure that there is a Senior Manager with responsibility for every activity, business area andmanagement function in the firm (known as the concept of ‘Overall Responsibility’).

It is fair to say that the above removwe anticipate these firms should be able to transition existing Approved Persons relatively seamlessly intoSMCR (either as Senior Managers or Certified staff). This is in line with wnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the newresponsibilities that it expects them to allocate among its Senior Managersclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in viewof the enhanced levels of informatioStatement of Responsibilities).

Limited Scope Firms(SMF29)Regime.Laundering Reporting Officer (SMF17) functions, depending on the firm’s specific regulatory permission(s).Insurance intermediaries which meet the criteria to be a Limited Scope Firm will only need to apply theLimited Scope Function.

At the other end of the spectrum, Enhancedcurrently exist under the banking regime (with the exception of Head of Key Business Area (SMF6) and theCredit Union SMF (SMF8)). Unlike Core SMCR Firms, Enhanced SMCR Firms will need to preResponsibilities Map, implement “handover procedures” and potentially apply the SMF18 (Other OverallResponsibility). This function applies where a senior executive is the most senior person responsible for anarea of the firm’s business but they dnot need this function, since the people ultimately responsible for everything the business does will alreadybe captured by other SMFs (the FCA therefore expects applications for the Sexception, rather than the rule). Enhanced SMCR Firms will also need to allocate a greater number ofPrescribed Responsibilities amongst its Senior Manager population.

An “at a glance” table of all SMF functions (and their applicaAnnex 1 to this Briefing Note. A full list of Prescribed Responsibilities (as applicable to Core SMCR Firms andEnhanced SMCR Firms) is set out in Annex 2.

Certification Regime

The Certification Regime will athe same way as the banking regime). These roles are largely aligned with the existing functions under theApproved Persons Regime:

the Significant Management Function (based on the current CF29 Significant Management controlledfunction under the Approved Persons Regime);

the Proprietary traders (also covered by the current CF29);

the CASS oversight function (based on the current CFwhere they have entered into a risk transfer agreement with insurers.

Functions subject to qualification requirements; and

the client dealing function (based on (but broadly expanding) the current CF3apply to any person dealing with clients, including retail and professional clients and eligiblecounterparties). For insurance intermediaries, this function does not apply to those persons advising onor dealing with non


It is fair to say that the above removwe anticipate these firms should be able to transition existing Approved Persons relatively seamlessly intoSMCR (either as Senior Managers or Certified staff). This is in line with wnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

sponsibilities that it expects them to allocate among its Senior Managersclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in viewof the enhanced levels of informatioStatement of Responsibilities).

Limited Scope Firms will only need to apply some limited SMFs. This includes the Limited Scope Function(SMF29) – this is currently the “Apportionment and ORegime. Limited Scope FirmsLaundering Reporting Officer (SMF17) functions, depending on the firm’s specific regulatory permission(s).Insurance intermediaries which meet the criteria to be a Limited Scope Firm will only need to apply theLimited Scope Function.




The Certification Regime will athe same way as the banking regime). These roles are largely aligned with the existing functions under theApproved Persons Regime:





the client dealing function (based on (but broadly expanding) the current CF3apply to any person dealing with clients, including retail and professional clients and eligiblecounterparties). For insurance intermediaries, this function does not apply to those persons advising onor dealing with non


It is fair to say that the above removwe anticipate these firms should be able to transition existing Approved Persons relatively seamlessly intoSMCR (either as Senior Managers or Certified staff). This is in line with wnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

sponsibilities that it expects them to allocate among its Senior Managersclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in viewof the enhanced levels of informatioStatement of Responsibilities).

will only need to apply some limited SMFs. This includes the Limited Scope Functionthis is currently the “Apportionment and O

Limited Scope Firms may also have to apply the Compliance Oversight (SMF16) and MoneyLaundering Reporting Officer (SMF17) functions, depending on the firm’s specific regulatory permission(s).Insurance intermediaries which meet the criteria to be a Limited Scope Firm will only need to apply theLimited Scope Function. Limited Scope Firms




The Certification Regime will apply to all types of firm and staff performing Certification Functions (in muchthe same way as the banking regime). These roles are largely aligned with the existing functions under theApproved Persons Regime:





the client dealing function (based on (but broadly expanding) the current CF3apply to any person dealing with clients, including retail and professional clients and eligiblecounterparties). For insurance intermediaries, this function does not apply to those persons advising onor dealing with non-investment


It is fair to say that the above removes some of the pressure from those firms subject to the ‘core regime’we anticipate these firms should be able to transition existing Approved Persons relatively seamlessly intoSMCR (either as Senior Managers or Certified staff). This is in line with wnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

sponsibilities that it expects them to allocate among its Senior Managersclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in viewof the enhanced levels of information the FCA will have, for example, via each Senior Manager’s signed

will only need to apply some limited SMFs. This includes the Limited Scope Functionthis is currently the “Apportionment and O

may also have to apply the Compliance Oversight (SMF16) and MoneyLaundering Reporting Officer (SMF17) functions, depending on the firm’s specific regulatory permission(s).Insurance intermediaries which meet the criteria to be a Limited Scope Firm will only need to apply the

Limited Scope Firms will also not need to apply any Prescribed Responsibilities.

At the other end of the spectrum, Enhanced SMCR Firms will, broadly speaking, need to apply all SMFs whichcurrently exist under the banking regime (with the exception of Head of Key Business Area (SMF6) and theCredit Union SMF (SMF8)). Unlike Core SMCR Firms, Enhanced SMCR Firms will need to preResponsibilities Map, implement “handover procedures” and potentially apply the SMF18 (Other OverallResponsibility). This function applies where a senior executive is the most senior person responsible for anarea of the firm’s business but they do not perform any other SMF role. The FCA notes that many firms mightnot need this function, since the people ultimately responsible for everything the business does will alreadybe captured by other SMFs (the FCA therefore expects applications for the Sexception, rather than the rule). Enhanced SMCR Firms will also need to allocate a greater number ofPrescribed Responsibilities amongst its Senior Manager population.


pply to all types of firm and staff performing Certification Functions (in muchthe same way as the banking regime). These roles are largely aligned with the existing functions under the





the client dealing function (based on (but broadly expanding) the current CF3apply to any person dealing with clients, including retail and professional clients and eligiblecounterparties). For insurance intermediaries, this function does not apply to those persons advising on

investment insurance contracts.

4


es some of the pressure from those firms subject to the ‘core regime’we anticipate these firms should be able to transition existing Approved Persons relatively seamlessly intoSMCR (either as Senior Managers or Certified staff). This is in line with wnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

sponsibilities that it expects them to allocate among its Senior Managersclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in view

n the FCA will have, for example, via each Senior Manager’s signed

will only need to apply some limited SMFs. This includes the Limited Scope Functionthis is currently the “Apportionment and Oversight Function” under the current Approved Persons


will also not need to apply any Prescribed Responsibilities.

SMCR Firms will, broadly speaking, need to apply all SMFs whichcurrently exist under the banking regime (with the exception of Head of Key Business Area (SMF6) and theCredit Union SMF (SMF8)). Unlike Core SMCR Firms, Enhanced SMCR Firms will need to preResponsibilities Map, implement “handover procedures” and potentially apply the SMF18 (Other OverallResponsibility). This function applies where a senior executive is the most senior person responsible for an

o not perform any other SMF role. The FCA notes that many firms mightnot need this function, since the people ultimately responsible for everything the business does will alreadybe captured by other SMFs (the FCA therefore expects applications for the Sexception, rather than the rule). Enhanced SMCR Firms will also need to allocate a greater number ofPrescribed Responsibilities amongst its Senior Manager population.

An “at a glance” table of all SMF functions (and their applicaAnnex 1 to this Briefing Note. A full list of Prescribed Responsibilities (as applicable to Core SMCR Firms and




the CASS oversight function (based on the current CF10a)where they have entered into a risk transfer agreement with insurers.



insurance contracts.


es some of the pressure from those firms subject to the ‘core regime’we anticipate these firms should be able to transition existing Approved Persons relatively seamlessly intoSMCR (either as Senior Managers or Certified staff). This is in line with wnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

sponsibilities that it expects them to allocate among its Senior Managersclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in view


will only need to apply some limited SMFs. This includes the Limited Scope Functionversight Function” under the current Approved Persons




o not perform any other SMF role. The FCA notes that many firms mightnot need this function, since the people ultimately responsible for everything the business does will alreadybe captured by other SMFs (the FCA therefore expects applications for the Sexception, rather than the rule). Enhanced SMCR Firms will also need to allocate a greater number ofPrescribed Responsibilities amongst its Senior Manager population.

An “at a glance” table of all SMF functions (and their applicability to each type of SMCR firm) appears inAnnex 1 to this Briefing Note. A full list of Prescribed Responsibilities (as applicable to Core SMCR Firms and


the Significant Management Function (based on the current CF29 Significant Management controlled


10a) – this will not apply to insurance intermediarieswhere they have entered into a risk transfer agreement with insurers.



es some of the pressure from those firms subject to the ‘core regime’we anticipate these firms should be able to transition existing Approved Persons relatively seamlessly intoSMCR (either as Senior Managers or Certified staff). This is in line with what the FCA intends insofar as it isnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

sponsibilities that it expects them to allocate among its Senior Managers – firms would do well to note theclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in view






o not perform any other SMF role. The FCA notes that many firms mightnot need this function, since the people ultimately responsible for everything the business does will alreadybe captured by other SMFs (the FCA therefore expects applications for the SMF18 function to be theexception, rather than the rule). Enhanced SMCR Firms will also need to allocate a greater number of

bility to each type of SMCR firm) appears inAnnex 1 to this Briefing Note. A full list of Prescribed Responsibilities (as applicable to Core SMCR Firms and



this will not apply to insurance intermediarieswhere they have entered into a risk transfer agreement with insurers.

the client dealing function (based on (but broadly expanding) the current CF30 Customer Function toapply to any person dealing with clients, including retail and professional clients and eligiblecounterparties). For insurance intermediaries, this function does not apply to those persons advising on



es some of the pressure from those firms subject to the ‘core regime’we anticipate these firms should be able to transition existing Approved Persons relatively seamlessly into

hat the FCA intends insofar as it isnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

firms would do well to note theclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in view





SMCR Firms will, broadly speaking, need to apply all SMFs whichcurrently exist under the banking regime (with the exception of Head of Key Business Area (SMF6) and theCredit Union SMF (SMF8)). Unlike Core SMCR Firms, Enhanced SMCR Firms will need to prepare aResponsibilities Map, implement “handover procedures” and potentially apply the SMF18 (Other OverallResponsibility). This function applies where a senior executive is the most senior person responsible for an

o not perform any other SMF role. The FCA notes that many firms mightnot need this function, since the people ultimately responsible for everything the business does will already

MF18 function to be theexception, rather than the rule). Enhanced SMCR Firms will also need to allocate a greater number of




this will not apply to insurance intermediaries

0 Customer Function toapply to any person dealing with clients, including retail and professional clients and eligiblecounterparties). For insurance intermediaries, this function does not apply to those persons advising on


es some of the pressure from those firms subject to the ‘core regime’ –we anticipate these firms should be able to transition existing Approved Persons relatively seamlessly into

hat the FCA intends insofar as it isnot expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specificfunctions”. Despite this, the FCA is keen to remind firms that it expects them to “think” about the new

firms would do well to note theclear emphasis by the regulator on the overarching concept of “individual accountability” (particularly in view





SMCR Firms will, broadly speaking, need to apply all SMFs whichcurrently exist under the banking regime (with the exception of Head of Key Business Area (SMF6) and the

pare aResponsibilities Map, implement “handover procedures” and potentially apply the SMF18 (Other OverallResponsibility). This function applies where a senior executive is the most senior person responsible for an

o not perform any other SMF role. The FCA notes that many firms mightnot need this function, since the people ultimately responsible for everything the business does will already

MF18 function to be theexception, rather than the rule). Enhanced SMCR Firms will also need to allocate a greater number of





0 Customer Function to

counterparties). For insurance intermediaries, this function does not apply to those persons advising on


not expecting firms to “change how [firms] organise themselves or to force them to hire people to fill specific

o not perform any other SMF role. The FCA notes that many firms might


Firms should note the above list includes roles that would have been Significant Influence Functions underthe Approved Persons Regime (i.e., CF29 and CF10a)regulatory scrutinynow become a purely internal matter for those firms wishing to appoint staff to these roles. Additionally,individuals performing such roles will no longer appear on

Also, the Certification Regime will capture “material risk takers” (i.e. also known as Remuneration Code Staff).This is a category of staff that all firms under AIFMD, UCITS, IFPRU and BIPRU are required to identify underthe FCA’s remmaterial risk takers (irrespective of their location overseas, if this is the case) will be covered by the “MaterialRisk Takers” Certified Function and will rremuneration regime does not apply to insurance intermediaries; it is likely, however, that insuranceintermediarSolvency II remuneration regime and will as a result have ‘Material Risk Taker’ Certified Functions.

There are additionally some further Certification Regime functions for algorithmic trading and anyone whosupervises or manages a C

Conduct Rules

The Conduct Rules will also operate in much the same way as the banking regime and will apply to all firms.There will be tiers of rules, one tier applying to all staff (other than ancillary staff) (the “Individual ConductRules”), and one tier which applies to Senior Managers (in addition to the first tier) (the “Senior ManagerConduct Rules”). The application of the Conduct Rules is narrower than for banks in that each of the rulesapplies only to a person's conduct relaany related ancillary activities), rather than simply “everything someone does on behalf of a banking firm,whether regulated or unregulated or linked to financial services”.

A table of the Conduct Rules is set out at Annex 3 to this Briefing Note. Senior Managers of insurers are alsosubject to an additional conduct rule; ‘Senior Insurance Manager Conduct Standard 5’ which provides thatsenior managers must pay due regard to the intethe provision by the firm of an appropriate degree of protection for their insured benefits. Although SeniorManagers of insurance intermediaries are not subject to this additional conduct rulimportant for Senior Managers of insurance intermediaries to be aware of the implications this may have ontheir insurance clients and how it may impact their firm in assisting and dealing with policyholders.

How does the extended regim

The FCA proposes that all partners in a firm will be Senior Managers, as is the default case under the currentApproved Persons Regime (as per the CF4 controlled function). There will, therefore, be a newManagement Function (known as SMF27). However, if a partner has no involvement in managing the firmand therefore would not meet the FSMA definition of a Senior Manager, then SMF27 will not apply and thepartner will not need to be approvesilent partners or, where the firm has a large number of partners at a junior level who have no involvement inmanaging the firm or authority to act on behalf of the firm, such partnersadditional observation to this, whilst there is no express reference to “corporate partners” in the ConsultationPaper, one might surmise that corporate partners will no longer require regulatory approval under SMCR.

The different responsibilities of individual partners should be reflected in their Statement of Responsibilities,such that partners with more executiveanother Senior Management Function,for both roles (again, as is similarly the case under the Approved Persons Regime).

Firms should note the above list includes roles that would have been Significant Influence Functions underthe Approved Persons Regime (i.e., CF29 and CF10a)regulatory scrutiny during the FCA’s assessment of a candidate’s “fitness and propriety”. That process willnow become a purely internal matter for those firms wishing to appoint staff to these roles. Additionally,individuals performing such roles will no longer appear on

Also, the Certification Regime will capture “material risk takers” (i.e. also known as Remuneration Code Staff).This is a category of staff that all firms under AIFMD, UCITS, IFPRU and BIPRU are required to identify underthe FCA’s remuneration regime and that Solvency II firms have to identify under Solvency II. All of a firm’smaterial risk takers (irrespective of their location overseas, if this is the case) will be covered by the “MaterialRisk Takers” Certified Function and will rremuneration regime does not apply to insurance intermediaries; it is likely, however, that insuranceintermediaries will need to identify material risk takers. All Solvency II insurers are oSolvency II remuneration regime and will as a result have ‘Material Risk Taker’ Certified Functions.

There are additionally some further Certification Regime functions for algorithmic trading and anyone whosupervises or manages a C

Conduct Rules


of the Conduct Rules is set out at Annex 3 to this Briefing Note. Senior Managers of insurers are alsosubject to an additional conduct rule; ‘Senior Insurance Manager Conduct Standard 5’ which provides thatsenior managers must pay due regard to the intethe provision by the firm of an appropriate degree of protection for their insured benefits. Although SeniorManagers of insurance intermediaries are not subject to this additional conduct rulimportant for Senior Managers of insurance intermediaries to be aware of the implications this may have ontheir insurance clients and how it may impact their firm in assisting and dealing with policyholders.



different responsibilities of individual partners should be reflected in their Statement of Responsibilities,such that partners with more executiveanother Senior Management Function,for both roles (again, as is similarly the case under the Approved Persons Regime).

Firms should note the above list includes roles that would have been Significant Influence Functions underthe Approved Persons Regime (i.e., CF29 and CF10a)

during the FCA’s assessment of a candidate’s “fitness and propriety”. That process willnow become a purely internal matter for those firms wishing to appoint staff to these roles. Additionally,individuals performing such roles will no longer appear on

Also, the Certification Regime will capture “material risk takers” (i.e. also known as Remuneration Code Staff).This is a category of staff that all firms under AIFMD, UCITS, IFPRU and BIPRU are required to identify under

uneration regime and that Solvency II firms have to identify under Solvency II. All of a firm’smaterial risk takers (irrespective of their location overseas, if this is the case) will be covered by the “MaterialRisk Takers” Certified Function and will rremuneration regime does not apply to insurance intermediaries; it is likely, however, that insurance

need to identify material risk takers. All Solvency II insurers are oSolvency II remuneration regime and will as a result have ‘Material Risk Taker’ Certified Functions.

There are additionally some further Certification Regime functions for algorithmic trading and anyone whosupervises or manages a Certified Function.





different responsibilities of individual partners should be reflected in their Statement of Responsibilities,such that partners with more executiveanother Senior Management Function,for both roles (again, as is similarly the case under the Approved Persons Regime).

Firms should note the above list includes roles that would have been Significant Influence Functions underthe Approved Persons Regime (i.e., CF29 and CF10a)

during the FCA’s assessment of a candidate’s “fitness and propriety”. That process willnow become a purely internal matter for those firms wishing to appoint staff to these roles. Additionally,individuals performing such roles will no longer appear on


uneration regime and that Solvency II firms have to identify under Solvency II. All of a firm’smaterial risk takers (irrespective of their location overseas, if this is the case) will be covered by the “MaterialRisk Takers” Certified Function and will require certification by the firm as “fit and proper”. The FCA’sremuneration regime does not apply to insurance intermediaries; it is likely, however, that insurance


There are additionally some further Certification Regime functions for algorithmic trading and anyone whoertified Function.

The Conduct Rules will also operate in much the same way as the banking regime and will apply to all firms.There will be tiers of rules, one tier applying to all staff (other than ancillary staff) (the “Individual ConductRules”), and one tier which applies to Senior Managers (in addition to the first tier) (the “Senior ManagerConduct Rules”). The application of the Conduct Rules is narrower than for banks in that each of the rulesapplies only to a person's conduct relating to regulated or unregulated financial services activities (includingany related ancillary activities), rather than simply “everything someone does on behalf of a banking firm,whether regulated or unregulated or linked to financial services”.


How does the extended regime apply if my firm is structured as a partnership?

The FCA proposes that all partners in a firm will be Senior Managers, as is the default case under the currentApproved Persons Regime (as per the CF4 controlled function). There will, therefore, be a newManagement Function (known as SMF27). However, if a partner has no involvement in managing the firmand therefore would not meet the FSMA definition of a Senior Manager, then SMF27 will not apply and thepartner will not need to be approved as a Senior Manager. The FCA suggests that where a firm has purelysilent partners or, where the firm has a large number of partners at a junior level who have no involvement inmanaging the firm or authority to act on behalf of the firm, such partnersadditional observation to this, whilst there is no express reference to “corporate partners” in the ConsultationPaper, one might surmise that corporate partners will no longer require regulatory approval under SMCR.

different responsibilities of individual partners should be reflected in their Statement of Responsibilities,such that partners with more executive-type roles will have more extensive statements. If a partner performsanother Senior Management Function, such as the Chief Executive or MLRO, they will need to be approvedfor both roles (again, as is similarly the case under the Approved Persons Regime).

5

Firms should note the above list includes roles that would have been Significant Influence Functions underthe Approved Persons Regime (i.e., CF29 and CF10a) – and equally would have been subject to a high level of

during the FCA’s assessment of a candidate’s “fitness and propriety”. That process willnow become a purely internal matter for those firms wishing to appoint staff to these roles. Additionally,individuals performing such roles will no longer appear on the FCA Register.


uneration regime and that Solvency II firms have to identify under Solvency II. All of a firm’smaterial risk takers (irrespective of their location overseas, if this is the case) will be covered by the “Material

equire certification by the firm as “fit and proper”. The FCA’sremuneration regime does not apply to insurance intermediaries; it is likely, however, that insurance


There are additionally some further Certification Regime functions for algorithmic trading and anyone who

The Conduct Rules will also operate in much the same way as the banking regime and will apply to all firms.There will be tiers of rules, one tier applying to all staff (other than ancillary staff) (the “Individual ConductRules”), and one tier which applies to Senior Managers (in addition to the first tier) (the “Senior ManagerConduct Rules”). The application of the Conduct Rules is narrower than for banks in that each of the rules

ting to regulated or unregulated financial services activities (includingany related ancillary activities), rather than simply “everything someone does on behalf of a banking firm,whether regulated or unregulated or linked to financial services”.

of the Conduct Rules is set out at Annex 3 to this Briefing Note. Senior Managers of insurers are alsosubject to an additional conduct rule; ‘Senior Insurance Manager Conduct Standard 5’ which provides thatsenior managers must pay due regard to the interests of current and potential future policyholders in ensuringthe provision by the firm of an appropriate degree of protection for their insured benefits. Although SeniorManagers of insurance intermediaries are not subject to this additional conduct rulimportant for Senior Managers of insurance intermediaries to be aware of the implications this may have ontheir insurance clients and how it may impact their firm in assisting and dealing with policyholders.

e apply if my firm is structured as a partnership?

The FCA proposes that all partners in a firm will be Senior Managers, as is the default case under the currentApproved Persons Regime (as per the CF4 controlled function). There will, therefore, be a newManagement Function (known as SMF27). However, if a partner has no involvement in managing the firmand therefore would not meet the FSMA definition of a Senior Manager, then SMF27 will not apply and the

d as a Senior Manager. The FCA suggests that where a firm has purelysilent partners or, where the firm has a large number of partners at a junior level who have no involvement inmanaging the firm or authority to act on behalf of the firm, such partnersadditional observation to this, whilst there is no express reference to “corporate partners” in the ConsultationPaper, one might surmise that corporate partners will no longer require regulatory approval under SMCR.

different responsibilities of individual partners should be reflected in their Statement of Responsibilities,type roles will have more extensive statements. If a partner performs

such as the Chief Executive or MLRO, they will need to be approvedfor both roles (again, as is similarly the case under the Approved Persons Regime).

Firms should note the above list includes roles that would have been Significant Influence Functions underand equally would have been subject to a high level of

during the FCA’s assessment of a candidate’s “fitness and propriety”. That process willnow become a purely internal matter for those firms wishing to appoint staff to these roles. Additionally,

the FCA Register.







ting to regulated or unregulated financial services activities (includingany related ancillary activities), rather than simply “everything someone does on behalf of a banking firm,whether regulated or unregulated or linked to financial services”.

of the Conduct Rules is set out at Annex 3 to this Briefing Note. Senior Managers of insurers are alsosubject to an additional conduct rule; ‘Senior Insurance Manager Conduct Standard 5’ which provides that

rests of current and potential future policyholders in ensuringthe provision by the firm of an appropriate degree of protection for their insured benefits. Although SeniorManagers of insurance intermediaries are not subject to this additional conduct rulimportant for Senior Managers of insurance intermediaries to be aware of the implications this may have ontheir insurance clients and how it may impact their firm in assisting and dealing with policyholders.



d as a Senior Manager. The FCA suggests that where a firm has purelysilent partners or, where the firm has a large number of partners at a junior level who have no involvement inmanaging the firm or authority to act on behalf of the firm, such partnersadditional observation to this, whilst there is no express reference to “corporate partners” in the ConsultationPaper, one might surmise that corporate partners will no longer require regulatory approval under SMCR.





the FCA Register.




need to identify material risk takers. All Solvency II insurers are of course subject to theSolvency II remuneration regime and will as a result have ‘Material Risk Taker’ Certified Functions.



ting to regulated or unregulated financial services activities (includingany related ancillary activities), rather than simply “everything someone does on behalf of a banking firm,


rests of current and potential future policyholders in ensuringthe provision by the firm of an appropriate degree of protection for their insured benefits. Although SeniorManagers of insurance intermediaries are not subject to this additional conduct rule themselves, it isimportant for Senior Managers of insurance intermediaries to be aware of the implications this may have ontheir insurance clients and how it may impact their firm in assisting and dealing with policyholders.



d as a Senior Manager. The FCA suggests that where a firm has purelysilent partners or, where the firm has a large number of partners at a junior level who have no involvement inmanaging the firm or authority to act on behalf of the firm, such partners will not be caught by SMCR. As anadditional observation to this, whilst there is no express reference to “corporate partners” in the ConsultationPaper, one might surmise that corporate partners will no longer require regulatory approval under SMCR.









f course subject to theSolvency II remuneration regime and will as a result have ‘Material Risk Taker’ Certified Functions.





rests of current and potential future policyholders in ensuringthe provision by the firm of an appropriate degree of protection for their insured benefits. Although Senior

e themselves, it isimportant for Senior Managers of insurance intermediaries to be aware of the implications this may have ontheir insurance clients and how it may impact their firm in assisting and dealing with policyholders.


The FCA proposes that all partners in a firm will be Senior Managers, as is the default case under the currentApproved Persons Regime (as per the CF4 controlled function). There will, therefore, be a new Partner SeniorManagement Function (known as SMF27). However, if a partner has no involvement in managing the firmand therefore would not meet the FSMA definition of a Senior Manager, then SMF27 will not apply and the

d as a Senior Manager. The FCA suggests that where a firm has purelysilent partners or, where the firm has a large number of partners at a junior level who have no involvement in

will not be caught by SMCR. As anadditional observation to this, whilst there is no express reference to “corporate partners” in the ConsultationPaper, one might surmise that corporate partners will no longer require regulatory approval under SMCR.


such as the Chief Executive or MLRO, they will need to be approved







f course subject to the





rests of current and potential future policyholders in ensuringthe provision by the firm of an appropriate degree of protection for their insured benefits. Although Senior

e themselves, it isimportant for Senior Managers of insurance intermediaries to be aware of the implications this may have ontheir insurance clients and how it may impact their firm in assisting and dealing with policyholders.


The FCA proposes that all partners in a firm will be Senior Managers, as is the default case under the currentPartner Senior

Management Function (known as SMF27). However, if a partner has no involvement in managing the firmand therefore would not meet the FSMA definition of a Senior Manager, then SMF27 will not apply and the

d as a Senior Manager. The FCA suggests that where a firm has purelysilent partners or, where the firm has a large number of partners at a junior level who have no involvement in

will not be caught by SMCR. As anadditional observation to this, whilst there is no express reference to “corporate partners” in the ConsultationPaper, one might surmise that corporate partners will no longer require regulatory approval under SMCR.


such as the Chief Executive or MLRO, they will need to be approved


rests of current and potential future policyholders in ensuring

type roles will have more extensive statements. If a partner performs

Are there any specified Senior Manager positions which must be filled and/or specificresponsibilities w

Yes. There are specified Senior Management Functions (SMFs) which apply (as a minimum), depending onwhether the firm falls into the category of Core SMCR Firm, Enhanced SMCR Firm or Limited Scope Firm (asdetailed above) (it alsoexample). The FCA does not intend that a firm needs to reorganise itself or hire new people to fill roles orotherwise meet the requirements of SMCR.

Prescribed Responsibilitiesone individualResponsibilities). Each Prescribed Responsibility should be given to thsenior person responsible for the particular area, with sufficient authority and competence to carry it outproperly. A table of all Prescribed Responsibilities, as applicable to Core SMCR Firms and Enhanced SMCRFirms, ap

What is the “Duty of Responsibility” for Senior Managers?

Under the new regime, the concept of a “duty of responsibility” will be extended to all Senior Managers, in thesame way as it currently works under the banresponsible for any breach in the area for which they are accountable, unless they are able to demonstratethat they have taken ‘reasonable steps’ to prevent or stop the breach. The burden of prooto show that the Senior Manager did not take such reasonable steps, and the regime will not applyretrospectively.

When deciding whether to take action against a Senior Manager, the FCA will consider various criteria, whichare set outSenior Manager and the nature, scale and complexity of the business, the seriousness of the breach and theirlevel of seniority and whether the Senior Manatogether with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision obeen issued against Senior Managers at this time yet there are a handful of investigations currently underwayin this space.

In taking action, the FCA will look to the Senior Manager’s Statement of Responsibilities in order to determinwhether they were responsible for the relevant part of the business and therefore any breach. In practice,this means that firms need to focus carefully on preparing Statements of Responsibility which are clearlydrafted, as well as detailing their repoalso ensure that they have adequate protection in place under their D&O insurance to appropriately addressthe role of Senior Managers and take expert advice where necessary.

For further

What is the territorial applicability of the regime? What if my firm is a UK branch of anoverseas firm?

General note

For Senior Managerswhether they are based in the UK or overseas, so firms need to assess who is responsible with that in mind.This might impact, for example, directors on a UKEnhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”(SMF7) and whether this might also potentially capture their overseas staffinfluence on the management or con

Are there any specified Senior Manager positions which must be filled and/or specificresponsibilities w

Yes. There are specified Senior Management Functions (SMFs) which apply (as a minimum), depending onwhether the firm falls into the category of Core SMCR Firm, Enhanced SMCR Firm or Limited Scope Firm (asdetailed above) (it alsoexample). The FCA does not intend that a firm needs to reorganise itself or hire new people to fill roles orotherwise meet the requirements of SMCR.

Prescribed Responsibilitiesone individual – except in the case of Limited Scope Firms who do not need to allocate PrescribedResponsibilities). Each Prescribed Responsibility should be given to thsenior person responsible for the particular area, with sufficient authority and competence to carry it outproperly. A table of all Prescribed Responsibilities, as applicable to Core SMCR Firms and Enhanced SMCRFirms, appears at Annex 2 of this Briefing Note.


Under the new regime, the concept of a “duty of responsibility” will be extended to all Senior Managers, in thesame way as it currently works under the banresponsible for any breach in the area for which they are accountable, unless they are able to demonstratethat they have taken ‘reasonable steps’ to prevent or stop the breach. The burden of prooto show that the Senior Manager did not take such reasonable steps, and the regime will not applyretrospectively.

When deciding whether to take action against a Senior Manager, the FCA will consider various criteria, whichare set out in their Decision and Procedure and Penalties Manual, including the role and responsibilities of theSenior Manager and the nature, scale and complexity of the business, the seriousness of the breach and theirlevel of seniority and whether the Senior Manatogether with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision obeen issued against Senior Managers at this time yet there are a handful of investigations currently underwayin this space.


For further information on the duty of responsibility, please see our article here.

What is the territorial applicability of the regime? What if my firm is a UK branch of anoverseas firm?

General note

For Senior Managers –whether they are based in the UK or overseas, so firms need to assess who is responsible with that in mind.This might impact, for example, directors on a UKEnhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”(SMF7) and whether this might also potentially capture their overseas staffinfluence on the management or con

Are there any specified Senior Manager positions which must be filled and/or specificresponsibilities which must be allocated?

Yes. There are specified Senior Management Functions (SMFs) which apply (as a minimum), depending onwhether the firm falls into the category of Core SMCR Firm, Enhanced SMCR Firm or Limited Scope Firm (asdetailed above) (it also depends on whether the firm is structured as a company or a partnership, forexample). The FCA does not intend that a firm needs to reorganise itself or hire new people to fill roles orotherwise meet the requirements of SMCR.

Prescribed Responsibilities must all be allocated across firms’ Senior Managers (even if this is a population ofexcept in the case of Limited Scope Firms who do not need to allocate Prescribed

Responsibilities). Each Prescribed Responsibility should be given to thsenior person responsible for the particular area, with sufficient authority and competence to carry it outproperly. A table of all Prescribed Responsibilities, as applicable to Core SMCR Firms and Enhanced SMCR

pears at Annex 2 of this Briefing Note.


Under the new regime, the concept of a “duty of responsibility” will be extended to all Senior Managers, in thesame way as it currently works under the banresponsible for any breach in the area for which they are accountable, unless they are able to demonstratethat they have taken ‘reasonable steps’ to prevent or stop the breach. The burden of prooto show that the Senior Manager did not take such reasonable steps, and the regime will not apply

When deciding whether to take action against a Senior Manager, the FCA will consider various criteria, whichin their Decision and Procedure and Penalties Manual, including the role and responsibilities of the

Senior Manager and the nature, scale and complexity of the business, the seriousness of the breach and theirlevel of seniority and whether the Senior Manatogether with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision obeen issued against Senior Managers at this time yet there are a handful of investigations currently underway


information on the duty of responsibility, please see our article here.

What is the territorial applicability of the regime? What if my firm is a UK branch of an

– the Senior Managers Regime will apply towhether they are based in the UK or overseas, so firms need to assess who is responsible with that in mind.This might impact, for example, directors on a UKEnhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”(SMF7) and whether this might also potentially capture their overseas staffinfluence on the management or con

Are there any specified Senior Manager positions which must be filled and/or specifichich must be allocated?

Yes. There are specified Senior Management Functions (SMFs) which apply (as a minimum), depending onwhether the firm falls into the category of Core SMCR Firm, Enhanced SMCR Firm or Limited Scope Firm (as

depends on whether the firm is structured as a company or a partnership, forexample). The FCA does not intend that a firm needs to reorganise itself or hire new people to fill roles orotherwise meet the requirements of SMCR.

must all be allocated across firms’ Senior Managers (even if this is a population ofexcept in the case of Limited Scope Firms who do not need to allocate Prescribed




Under the new regime, the concept of a “duty of responsibility” will be extended to all Senior Managers, in thesame way as it currently works under the banking regime. This means that every Senior Manager will beresponsible for any breach in the area for which they are accountable, unless they are able to demonstratethat they have taken ‘reasonable steps’ to prevent or stop the breach. The burden of prooto show that the Senior Manager did not take such reasonable steps, and the regime will not apply


Senior Manager and the nature, scale and complexity of the business, the seriousness of the breach and theirlevel of seniority and whether the Senior Manatogether with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision obeen issued against Senior Managers at this time yet there are a handful of investigations currently underway

In taking action, the FCA will look to the Senior Manager’s Statement of Responsibilities in order to determinwhether they were responsible for the relevant part of the business and therefore any breach. In practice,this means that firms need to focus carefully on preparing Statements of Responsibility which are clearlydrafted, as well as detailing their reporting lines and handover procedures for Senior Managers. Firms shouldalso ensure that they have adequate protection in place under their D&O insurance to appropriately addressthe role of Senior Managers and take expert advice where necessary.



the Senior Managers Regime will apply towhether they are based in the UK or overseas, so firms need to assess who is responsible with that in mind.This might impact, for example, directors on a UKEnhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”(SMF7) and whether this might also potentially capture their overseas staffinfluence on the management or conduct of the affairs of the UK

6

Are there any specified Senior Manager positions which must be filled and/or specifichich must be allocated?


depends on whether the firm is structured as a company or a partnership, forexample). The FCA does not intend that a firm needs to reorganise itself or hire new people to fill roles or





Under the new regime, the concept of a “duty of responsibility” will be extended to all Senior Managers, in theking regime. This means that every Senior Manager will be

responsible for any breach in the area for which they are accountable, unless they are able to demonstratethat they have taken ‘reasonable steps’ to prevent or stop the breach. The burden of prooto show that the Senior Manager did not take such reasonable steps, and the regime will not apply


Senior Manager and the nature, scale and complexity of the business, the seriousness of the breach and theirlevel of seniority and whether the Senior Manager took reasonable steps to follow the firm’s procedure,together with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision obeen issued against Senior Managers at this time yet there are a handful of investigations currently underway

In taking action, the FCA will look to the Senior Manager’s Statement of Responsibilities in order to determinwhether they were responsible for the relevant part of the business and therefore any breach. In practice,this means that firms need to focus carefully on preparing Statements of Responsibility which are clearly

rting lines and handover procedures for Senior Managers. Firms shouldalso ensure that they have adequate protection in place under their D&O insurance to appropriately addressthe role of Senior Managers and take expert advice where necessary.



the Senior Managers Regime will apply towhether they are based in the UK or overseas, so firms need to assess who is responsible with that in mind.This might impact, for example, directors on a UK-regulated entity board who are based outside the UK.Enhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”(SMF7) and whether this might also potentially capture their overseas staff

duct of the affairs of the UK

Are there any specified Senior Manager positions which must be filled and/or specific




Responsibilities). Each Prescribed Responsibility should be given to the Senior Manager who is the mostsenior person responsible for the particular area, with sufficient authority and competence to carry it outproperly. A table of all Prescribed Responsibilities, as applicable to Core SMCR Firms and Enhanced SMCR





Senior Manager and the nature, scale and complexity of the business, the seriousness of the breach and theirger took reasonable steps to follow the firm’s procedure,

together with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision obeen issued against Senior Managers at this time yet there are a handful of investigations currently underway


rting lines and handover procedures for Senior Managers. Firms shouldalso ensure that they have adequate protection in place under their D&O insurance to appropriately addressthe role of Senior Managers and take expert advice where necessary.



the Senior Managers Regime will apply to anyone who performs a Senior Manager role,whether they are based in the UK or overseas, so firms need to assess who is responsible with that in mind.

regulated entity board who are based outside the UK.Enhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”(SMF7) and whether this might also potentially capture their overseas staff

duct of the affairs of the UK-regulated entity.





e Senior Manager who is the mostsenior person responsible for the particular area, with sufficient authority and competence to carry it outproperly. A table of all Prescribed Responsibilities, as applicable to Core SMCR Firms and Enhanced SMCR






together with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision obeen issued against Senior Managers at this time yet there are a handful of investigations currently underway


rting lines and handover procedures for Senior Managers. Firms shouldalso ensure that they have adequate protection in place under their D&O insurance to appropriately address



anyone who performs a Senior Manager role,whether they are based in the UK or overseas, so firms need to assess who is responsible with that in mind.

regulated entity board who are based outside the UK.Enhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”(SMF7) and whether this might also potentially capture their overseas staff – i.e., those who have significant

regulated entity.








responsible for any breach in the area for which they are accountable, unless they are able to demonstratethat they have taken ‘reasonable steps’ to prevent or stop the breach. The burden of proof lies with the FCAto show that the Senior Manager did not take such reasonable steps, and the regime will not apply



together with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orboth depending on the facts of the case. Under the banking regime, no public decision or final notices havebeen issued against Senior Managers at this time yet there are a handful of investigations currently underway





regulated entity board who are based outside the UK.Enhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”

i.e., those who have significant








responsible for any breach in the area for which they are accountable, unless they are able to demonstratef lies with the FCA

to show that the Senior Manager did not take such reasonable steps, and the regime will not apply



together with all the circumstances of the case. Action may be taken against the Senior Manager, the firm orr final notices have

been issued against Senior Managers at this time yet there are a handful of investigations currently underway

In taking action, the FCA will look to the Senior Manager’s Statement of Responsibilities in order to determinewhether they were responsible for the relevant part of the business and therefore any breach. In practice,this means that firms need to focus carefully on preparing Statements of Responsibility which are clearly




regulated entity board who are based outside the UK. ForEnhanced SMCR Firms, these firms will also need to bear in mind the “group entity senior manager function”

i.e., those who have significant


Under the new regime, the concept of a “duty of responsibility” will be extended to all Senior Managers, in the

e


anyone who performs a Senior Manager role,

For Certification and Conduct Rules staffstaff are based overseas, those “dealing with” clients in the UK (note that “dealing with”include “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whomthere is no territorial restriction (as explained above).

Branches

The application of the regime is different for UK branches of overseas firms depending on whether they areEEA or non

UK branch of an EEA firm

There are two SMFs proposeApproved Persons Regime: Branch Senior Manager (SMF21) and Money Laundering Reporting Officer(SMF17). The regime will apply to anyone who performs a Senior Manager role, whethe UK or overseas (as is the case for UKidentify Senior Managers who are primarily based in the UK.

The Certification Regime will be limited such as to apply only tof the UK (even if they “deal with” a UK client).

The Conduct Rules will also apply to all staff based in the UK (except ancillary staff) in relation to financialservices activities.

UK branch of a non

There are five SMFs proposed for non

Head of Third Country Branch (SMF19)

Executive Director (SMF3)

Partner (SMF27)

Compliance Oversight (SMF16)

Money Laundering Reporting Officer (SMF17).

There are also certain Prescribed Responsibilitiresponsibility for management of the firm’s risk management processes in the UK and responsibility for thefirm’s compliance with the UK regulatory system.

Again, the Certification Regime willeven if they deal with a UK client (as is the case with EEA branches).

Again, the Conduct Rules will apply to all staff based in the UK (except ancillary staff) in relation to financiaservices activities (as is the case with EEA branches).

What should I do now?

Raise awareness of the proposals, particularly amongst the senior manager population with a view toensuring that the “tone from the top” is pitched appropriately.

Establish afor management going forward.

Create a project plan for implementation and operation of the new regimes.

Identify the likely Senior Manager population (which the Facross) and consider any difficult issues which should be raised with the FCA through consultation.


Branches

The application of the regime is different for UK branches of overseas firms depending on whether they areEEA or non-EEA branches. As a general note, branches are out of scope of the ‘enhanced regime’.


There are two SMFs proposeApproved Persons Regime: Branch Senior Manager (SMF21) and Money Laundering Reporting Officer(SMF17). The regime will apply to anyone who performs a Senior Manager role, whethe UK or overseas (as is the case for UKidentify Senior Managers who are primarily based in the UK.


The Conduct Rules will also apply to all staff based in the UK (except ancillary staff) in relation to financialservices activities.

UK branch of a non-




Partner (SMF27)








Establish a working group and identify who will be responsible for leading implementation and resourcingfor management going forward.




The application of the regime is different for UK branches of overseas firms depending on whether they areEEA branches. As a general note, branches are out of scope of the ‘enhanced regime’.


There are two SMFs proposed for EEA branches, which (broadly speaking) reflect the current roles under theApproved Persons Regime: Branch Senior Manager (SMF21) and Money Laundering Reporting Officer(SMF17). The regime will apply to anyone who performs a Senior Manager role, whethe UK or overseas (as is the case for UKidentify Senior Managers who are primarily based in the UK.


The Conduct Rules will also apply to all staff based in the UK (except ancillary staff) in relation to financial

-EEA firm











working group and identify who will be responsible for leading implementation and resourcingfor management going forward.



For Certification and Conduct Rules staff – these aspects are territorially limited to staff based in the UK, or ifstaff are based overseas, those “dealing with” clients in the UK (note that “dealing with”include “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whomthere is no territorial restriction (as explained above).


d for EEA branches, which (broadly speaking) reflect the current roles under theApproved Persons Regime: Branch Senior Manager (SMF21) and Money Laundering Reporting Officer(SMF17). The regime will apply to anyone who performs a Senior Manager role, whethe UK or overseas (as is the case for UK-authorised firms), but the FCA expects most branches to be able toidentify Senior Managers who are primarily based in the UK.



There are five SMFs proposed for non-EEA branches:




There are also certain Prescribed Responsibilities that will apply for nonresponsibility for management of the firm’s risk management processes in the UK and responsibility for thefirm’s compliance with the UK regulatory system.

Again, the Certification Regime will be limited to people based in the UK, but not those outside of the UK,even if they deal with a UK client (as is the case with EEA branches).



working group and identify who will be responsible for leading implementation and resourcingfor management going forward.



7

these aspects are territorially limited to staff based in the UK, or ifstaff are based overseas, those “dealing with” clients in the UK (note that “dealing with”include “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whomthere is no territorial restriction (as explained above).


d for EEA branches, which (broadly speaking) reflect the current roles under theApproved Persons Regime: Branch Senior Manager (SMF21) and Money Laundering Reporting Officer(SMF17). The regime will apply to anyone who performs a Senior Manager role, whe

authorised firms), but the FCA expects most branches to be able toidentify Senior Managers who are primarily based in the UK.



EEA branches:


es that will apply for nonresponsibility for management of the firm’s risk management processes in the UK and responsibility for thefirm’s compliance with the UK regulatory system.

be limited to people based in the UK, but not those outside of the UK,even if they deal with a UK client (as is the case with EEA branches).



working group and identify who will be responsible for leading implementation and resourcing



these aspects are territorially limited to staff based in the UK, or ifstaff are based overseas, those “dealing with” clients in the UK (note that “dealing with”include “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whom



authorised firms), but the FCA expects most branches to be able toidentify Senior Managers who are primarily based in the UK.

The Certification Regime will be limited such as to apply only to people based in the UK, but not those outside


es that will apply for non-EEA branches, including for example,responsibility for management of the firm’s risk management processes in the UK and responsibility for the

be limited to people based in the UK, but not those outside of the UK,even if they deal with a UK client (as is the case with EEA branches).

Again, the Conduct Rules will apply to all staff based in the UK (except ancillary staff) in relation to financia




Identify the likely Senior Manager population (which the FCA expects will generally be grandfatheredacross) and consider any difficult issues which should be raised with the FCA through consultation.

these aspects are territorially limited to staff based in the UK, or ifstaff are based overseas, those “dealing with” clients in the UK (note that “dealing with”include “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whom



authorised firms), but the FCA expects most branches to be able to

o people based in the UK, but not those outside


EEA branches, including for example,responsibility for management of the firm’s risk management processes in the UK and responsibility for the

be limited to people based in the UK, but not those outside of the UK,


Raise awareness of the proposals, particularly amongst the senior manager population with a view to



CA expects will generally be grandfatheredacross) and consider any difficult issues which should be raised with the FCA through consultation.


these aspects are territorially limited to staff based in the UK, or ifstaff are based overseas, those “dealing with” clients in the UK (note that “dealing with” is defined widely toinclude “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whom


d for EEA branches, which (broadly speaking) reflect the current roles under theApproved Persons Regime: Branch Senior Manager (SMF21) and Money Laundering Reporting Officer(SMF17). The regime will apply to anyone who performs a Senior Manager role, whether they are based in

authorised firms), but the FCA expects most branches to be able to










these aspects are territorially limited to staff based in the UK, or ifis defined widely to

include “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whom


d for EEA branches, which (broadly speaking) reflect the current roles under theApproved Persons Regime: Branch Senior Manager (SMF21) and Money Laundering Reporting Officer

ther they are based inauthorised firms), but the FCA expects most branches to be able to





Again, the Conduct Rules will apply to all staff based in the UK (except ancillary staff) in relation to financia l





include “having contact with”). There is, however, an exception for “Material Risk Takers”, in respect of whom


Consider any wider implications resulting from the designation (or not) of particular individuals as SeniorManag

Start the process for identification of Certification staff and other Conduct Rules staff.

Engage with relevant foreign stakeholders (for example, where headquarters or Senior Managers arebased overseas).

Commence preparation and development for training of all staff in respect of the Conduct Rules.

Review firms’ policies and procedures and update accordingly.

Review job descriptions and analyse implications for employment contracts and ouarrangements.

Prepare for changes to process, including additional record keeping requirements to comply with rules onregulatory references and annual certification requirements.

Specifically for insurance intermediariesincluding implementation of the Insurance Distribution Directive and General Data Protection Regulation.

Engage in the consultation process. We will be submitting a response on behalf of clients. If you wouldlike us to submit comments on your behalf, please provide your comments by 01 October 2017.

For further information, our comprehensive Extension of SMCR microsite is available here.

We are also developing an online SMCR Certification Portal for the insuraenabling firms to issue certificates to those staff subject to the Certification Regime simply and efficiently. Formore information please contact Pollyanna Deane.

Consider any wider implications resulting from the designation (or not) of particular individuals as SeniorManagers, for example for LLPs whether there are any tax consequences.


Engage with relevant foreign stakeholders (for example, where headquarters or Senior Managers areased overseas).



Review job descriptions and analyse implications for employment contracts and ouarrangements.



Engage in the consultation process. We will be submitting a response on behalf of clients. If you wouldike us to submit comments on your behalf, please provide your comments by 01 October 2017.



Consider any wider implications resulting from the designation (or not) of particular individuals as Seniorers, for example for LLPs whether there are any tax consequences.


Engage with relevant foreign stakeholders (for example, where headquarters or Senior Managers areased overseas).



Review job descriptions and analyse implications for employment contracts and ou








Engage with relevant foreign stakeholders (for example, where headquarters or Senior Managers are





Specifically for insurance intermediaries – ensure a holisticincluding implementation of the Insurance Distribution Directive and General Data Protection Regulation.




8








ensure a holisticincluding implementation of the Insurance Distribution Directive and General Data Protection Regulation.











ensure a holistic approach in preparing for regulatory changeincluding implementation of the Insurance Distribution Directive and General Data Protection Regulation.



We are also developing an online SMCR Certification Portal for the insuraenabling firms to issue certificates to those staff subject to the Certification Regime simply and efficiently. For






Prepare for changes to process, including additional record keeping requirements to comply with rules on

approach in preparing for regulatory changeincluding implementation of the Insurance Distribution Directive and General Data Protection Regulation.



We are also developing an online SMCR Certification Portal for the insurance industry with the aim ofenabling firms to issue certificates to those staff subject to the Certification Regime simply and efficiently. For


Consider any wider implications resulting from the designation (or not) of particular individuals as Senior




Review job descriptions and analyse implications for employment contracts and outsourcing





nce industry with the aim ofenabling firms to issue certificates to those staff subject to the Certification Regime simply and efficiently. For


Consider any wider implications resulting from the designation (or not) of particular individuals as Senior






nce industry with the aim ofenabling firms to issue certificates to those staff subject to the Certification Regime simply and efficiently. For



enabling firms to issue certificates to those staff subject to the Certification Regime simply and efficiently. For

ANNEX 1Senior Management Func

Function names

Governing Functions

SMF1 – Chief Executive

SMF3 – Executive Director

SMF27 –

Governing Function

SMF9 – Chair

Required Functions

SMF16 –

SMF17 –

SMF29 –Limited Scope Firms only)

Senior Management Functions for Limited Scope Firms

Firm type

Limited Permission Consumer Credit firms that have aCF8 under the Approved Persons Regime

Sole traders with no employees

Authorised professional firms whose only regulatedactivities are non

Oil market participants, service companies, energy marketparticipants, subsidiaries of local authorities or registeredsocial land

Insurance intermediaries whose principal business is notinsurance intermediation and who only have permissionto carry on insurance mediation actnon-investment insurance contracts

ANNEX 1 – Senior Management FunctionsSenior Management Func

Function names

Governing Functions

Chief Executive

Executive Director

Partner

Governing Function – Non

Chair

Required Functions

Compliance Oversight

Money Laundering Reporting Officer

Limited Scope Function (relevant tLimited Scope Firms only)


Firm type



Authorised professional firms whose only regulatedactivities are non-mainstream

Oil market participants, service companies, energy marketparticipants, subsidiaries of local authorities or registeredsocial landlords

Insurance intermediaries whose principal business is notinsurance intermediation and who only have permissionto carry on insurance mediation act

investment insurance contracts

Senior Management FunctionsSenior Management Functions

Chief Executive

Executive Director

Non-Executive



Limited Scope Function (relevant tLimited Scope Firms only)




Authorised professional firms whose only regulatedmainstream regulated activities

Oil market participants, service companies, energy marketparticipants, subsidiaries of local authorities or registered

Insurance intermediaries whose principal business is notinsurance intermediation and who only have permissionto carry on insurance mediation activity in relation to

investment insurance contracts

Senior Management Functionstions – Core Regime


Limited Scope Function (relevant to some



Authorised professional firms whose only regulatedregulated activities


Insurance intermediaries whose principal business is notinsurance intermediation and who only have permission

ivity in relation to

9

Senior Management FunctionsCore Regime

Descriptions

This is the person(s) with responsibility, under theimmediate authority of the governing body, for the conductof the whole of the business (or relevant

Note: Although the Chief Executive is the most seniormember of an executive team, it does not mean that afirm’s governing body cannot allocate specificresponsibilities to other Senior Managers.

A director of a

A partner in a firm, other than a limited partner in apartnership registered under the Limited Partnership Act1907.

The person withthe performance of the role of, the governing body of thefirm.

This is the person responsible for the compliance functionin the firm and reporting to the gover

This is the person who has responsibility for overseeing thefirm’s compliance with the FCA’s rules on systems andcontrols against money laundering.

o some This is currently called the ‘Apportionment and OversightFunction’ under the Approved Persons Regime. It is theperson who deals with the apportionment of responsibilitiesunder SYSC 4.4.3 R and oversees the establishmentmaintenance of controls under SYSC 4.1.1 R.


Senior Management Functions

Limited Permission Consumer Credit firms that have a SMF29Apportionment and Oversight Function under the ApprovedPersons Regime)

SMF16

Authorised professional firms whose only regulated SMF16

SMF17

SMF29


SMF16

SMF17

SMF29

Insurance intermediaries whose principal business is notinsurance intermediation and who only have permission

ivity in relation to

SMF29


Descriptions



A director of a firm, other than a Non

A partner in a firm, other than a limited partner in apartnership registered under the Limited Partnership Act1907.

The person with responsibility for chairing, and overseeingthe performance of the role of, the governing body of thefirm.



This is currently called the ‘Apportionment and OversightFunction’ under the Approved Persons Regime. It is theperson who deals with the apportionment of responsibilitiesunder SYSC 4.4.3 R and oversees the establishmentmaintenance of controls under SYSC 4.1.1 R.



SMF29 – Limited ScopeApportionment and Oversight Function under the ApprovedPersons Regime)

SMF16 – Compliance Oversight


SMF17 – Money Laundering Reporting Officer

SMF29 – Limited Scope Function


SMF17 – Money Laundering Reporting Officer






firm, other than a Non

A partner in a firm, other than a limited partner in apartnership registered under the Limited Partnership Act

responsibility for chairing, and overseeingthe performance of the role of, the governing body of the





Limited Scope Function (this is the same as theApportionment and Oversight Function under the Approved




Limited Scope Function






This is the person(s) with responsibility, under theimmediate authority of the governing body, for the conductof the whole of the business (or relevant activities).


firm, other than a Non-Executive Director.



This is the person responsible for the compliance functionin the firm and reporting to the governing body on this.




Function (this is the same as theApportionment and Oversight Function under the Approved







This is the person(s) with responsibility, under theimmediate authority of the governing body, for the conduct

activities).

Note: Although the Chief Executive is the most seniormember of an executive team, it does not mean that afirm’s governing body cannot allocate specific

Executive Director.



This is the person responsible for the compliance functionning body on this.

This is the person who has responsibility for overseeing thefirm’s compliance with the FCA’s rules on systems and

This is currently called the ‘Apportionment and OversightFunction’ under the Approved Persons Regime. It is theperson who deals with the apportionment of responsibilitiesunder SYSC 4.4.3 R and oversees the establishment and

Function (this is the same as theApportionment and Oversight Function under the Approved


immediate authority of the governing body, for the conduct

person who deals with the apportionment of responsibilities

Apportionment and Oversight Function under the Approved

Additional Senior Management Functions in Enhanced Firms

Function

SMF2 – Chief Finance Function

SMF4 – Chief Risk Function

SMF5 – Head of Internal

SMF14 –

SMF12 –

SMF10 –

SMF11 –

SMF13 –

SMF7 – Group Entity Senior Manager

SMF24 –

SMF18 –


Chief Finance Function

Chief Risk Function

Head of Internal

Senior Independent Director

Chair of the Remuneration Committee

Chair of the Risk Committee

Chair of the Audit Committee

Chair of the Nominations Committee

Group Entity Senior Manager

Chief Operations Function

Other Overall Responsibility


Chief Finance Function

Chief Risk Function

Head of Internal Audit



air of the Risk Committee



Group Entity Senior Manager

Chief Operations Function

Other Overall Responsibility




air of the Risk Committee



10


Descriptions

These functions will apply instead of the broad Systems andControls Function under the Approved Persons Regime.

The person with particular responsibility for leading theassessment of the Chair’s performance.

The person with responsibility for chairing, and overseeingthe performance of, any committee responsible for theoversight of the design and the implementation of theremuneration policies of a firm.

The person with responsibility for chairing, and overseeingthe performance of, any committee responsible for theoversight of the risk management systems, policies andprocedures of the firm.

The person with responsibility for chairing, and overseeingthe performance of, any committee responsible for theoversight of the internal audit system of the firm.

If a firm has a nomination committee, this peperson who chairs that committee.

This is someone who has significant influence on themanagement or conduct of the affairs of the UKentity and is employed by, or is an officer of, anothermember o

The most senior person responsible for managing theinternal operations (including HR), systems and technologyof a firm.

This function applies where a senior executivesenior person responsible for an area of the firm’s businessbut they do not perform any other Senior Managerfunction.

Many firms won’t need this function as the peopleultimately responsible for everything the business does willalready be caHowever, it gives flexibility and recognises the diversity ofbusiness structures in different types of firms. This isdiscussed in more detail below in the section on ‘OverallResponsibility’.


Descriptions







This is someone who has significant influence on themanagement or conduct of the affairs of the UKentity and is employed by, or is an officer of, anothermember of its group.

The most senior person responsible for managing theinternal operations (including HR), systems and technologyof a firm.

This function applies where a senior executivesenior person responsible for an area of the firm’s businessbut they do not perform any other Senior Managerfunction.

Many firms won’t need this function as the peopleultimately responsible for everything the business does willalready be captured by other Senior Manager Functions.However, it gives flexibility and recognises the diversity ofbusiness structures in different types of firms. This isdiscussed in more detail below in the section on ‘OverallResponsibility’.








This is someone who has significant influence on themanagement or conduct of the affairs of the UKentity and is employed by, or is an officer of, another

f its group.

The most senior person responsible for managing theinternal operations (including HR), systems and technology

This function applies where a senior executivesenior person responsible for an area of the firm’s businessbut they do not perform any other Senior Manager

Many firms won’t need this function as the peopleultimately responsible for everything the business does will

ptured by other Senior Manager Functions.However, it gives flexibility and recognises the diversity ofbusiness structures in different types of firms. This isdiscussed in more detail below in the section on ‘Overall




The person with responsibility for chairing, and overseeingthe performance of, any committee responsible for theoversight of the design and the implementation of the

The person with responsibility for chairing, and overseeingthe performance of, any committee responsible for theoversight of the risk management systems, policies and


If a firm has a nomination committee, this person is theperson who chairs that committee.

This is someone who has significant influence on themanagement or conduct of the affairs of the UKentity and is employed by, or is an officer of, another


This function applies where a senior executivesenior person responsible for an area of the firm’s businessbut they do not perform any other Senior Manager





The person with particular responsibility for leading the

The person with responsibility for chairing, and overseeingthe performance of, any committee responsible for theoversight of the design and the implementation of the

The person with responsibility for chairing, and overseeingthe performance of, any committee responsible for theoversight of the risk management systems, policies and


rson is the

This is someone who has significant influence on themanagement or conduct of the affairs of the UK-regulatedentity and is employed by, or is an officer of, another


This function applies where a senior executive is the mostsenior person responsible for an area of the firm’s businessbut they do not perform any other Senior Manager




These functions will apply instead of the broad Systems and

ANNEX 2

Prescribed Responsibilities for Core F

Prescribed Responsibility

1

2

3

4

5

6

7

Additional Prescribed Responsibilities in


8

9

10

11

12

13

14

ANNEX 2 – List

rescribed Responsibilities for Core F




List of Prescribed Responsibilities


Prescribed Responsibility Description

Performance by the firm of its obligations under the Senior Managers Regime, includingimplementation and oversight

Performance by the

Performance by the firm of its obligations in respect of notifications and training of theConduct Rules

Responsibility for the firm’s policies and procedures for countering the risk that the firmight be used to further financial crime

Responsibility for the firm’s compliance with CASS (if applicable)

Responsibility for ensuring the governing body is informed of its legal and regulatoryobligations

Responsibility for an AFM’s value forrepresentation and acting in investors’ best interests


Prescribed Responsibility Description

Compliance with the rules relating to the firm’s

Safeguarding and overseeing the independence and performance of the internal auditfunction (in accordance with SYSC 6.2)

Safeguarding and overseeing the independence and performance of the compliancefunction (in accordance wit

Safeguarding and overseeing the independence and performance of the risk function (inaccordance with SYSC 7.1.21R and SYSC 7.1.22R)

If the firm outsources its internal audit function, taking reasonable steps to ensure thatevery personwho perform external audit, including:

supervision and management of the work of outsourced internal auditors

management of potential conflicts of interest between the provision ofaudit and internal audit services

Developing and maintaining the firm’s business model

Managing the firm’s internal stressinformation provided to the FCA for the purposes of stress

of Prescribed Responsibilities


Description


Performance by the

Performance by the firm of its obligations in respect of notifications and training of theConduct Rules



Responsibility for ensuring the governing body is informed of its legal and regulatoryobligations



Description



Safeguarding and overseeing the independence and performance of the compliancefunction (in accordance wit


If the firm outsources its internal audit function, taking reasonable steps to ensure thatevery person involved in the performance of the service is independent from the personswho perform external audit, including:





11


rescribed Responsibilities for Core Firms


Performance by the firm of its obligations under the Certification Regime

Performance by the firm of its obligations in respect of notifications and training of the



Responsibility for ensuring the governing body is informed of its legal and regulatory


Additional Prescribed Responsibilities in Enhanced



Safeguarding and overseeing the independence and performance of the compliancefunction (in accordance with SYSC 6.1)


If the firm outsources its internal audit function, taking reasonable steps to ensure thatinvolved in the performance of the service is independent from the persons

who perform external audit, including:






Performance by the firm of its obligations under the Senior Managers Regime, including

firm of its obligations under the Certification Regime





Responsibility for an AFM’s value for money assessments, independent directorrepresentation and acting in investors’ best interests

nhanced Firms

Compliance with the rules relating to the firm’s Responsibilities Map


Safeguarding and overseeing the independence and performance of the complianceh SYSC 6.1)



who perform external audit, including:




Managing the firm’s internal stress-tests and ensuring the accuracy and timeliness ofinformation provided to the FCA for the purposes of stress





Responsibility for the firm’s policies and procedures for countering the risk that the fir



money assessments, independent directorrepresentation and acting in investors’ best interests

Responsibilities Map

Safeguarding and overseeing the independence and performance of the internal audit

Safeguarding and overseeing the independence and performance of the compliance




management of potential conflicts of interest between the provision of


tests and ensuring the accuracy and timeliness ofinformation provided to the FCA for the purposes of stress-testin





Responsibility for the firm’s policies and procedures for countering the risk that the fir



money assessments, independent director

Responsibilities Map



Safeguarding and overseeing the independence and performance of the risk function (in



management of potential conflicts of interest between the provision of

tests and ensuring the accuracy and timeliness oftesting




Responsibility for the firm’s policies and procedures for countering the risk that the firm


money assessments, independent director



Safeguarding and overseeing the independence and performance of the risk function (in



management of potential conflicts of interest between the provision of external

tests and ensuring the accuracy and timeliness of


involved in the performance of the service is independent from the persons

ANNEX 3

First Tier

1

2

3

4

5

Second Tier

SC1

SC2

SC3

SC4

ANNEX 3 – Conduct Rules

First Tier – Individual Conduct Rules

You must act with integrity

You must act with due care, skill and diligence

You must be open and cooperative with the FCA, the PRA and other regulators

You must pay due

You must observe proper standards of market conduct

Second Tier – Senior Manager Conduct Rules

You must take reasonable steps to ensure that the business of the firm for which you arecontrolled effectively

You must take reasonable steps to ensure that the business of the firm for which you are responsiblecomplies with the relevant requirements and standards of the regulatory system

You must take reasonableperson and that you oversee the discharge of the delegated responsibility effectively

You must disclose appropriately any information of which the FCA or PRA would reasonotice

Conduct Rules

Individual Conduct Rules




You must pay due regard to the interests of customers and treat them fairly


Senior Manager Conduct Rules



You must take reasonableperson and that you oversee the discharge of the delegated responsibility effectively

You must disclose appropriately any information of which the FCA or PRA would reaso

Conduct Rules

Individual Conduct Rules




regard to the interests of customers and treat them fairly





You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriateperson and that you oversee the discharge of the delegated responsibility effectively


12

Conduct Rules






You must take reasonable steps to ensure that the business of the firm for which you are


steps to ensure that any delegation of your responsibilities is to an appropriateperson and that you oversee the discharge of the delegated responsibility effectively

















You must take reasonable steps to ensure that the business of the firm for which you are responsible is



You must disclose appropriately any information of which the FCA or PRA would reaso nably expect


responsible is

You must take reasonable steps to ensure that the business of the firm for which you are responsible

steps to ensure that any delegation of your responsibilities is to an appropriate

nably expect


steps to ensure that any delegation of your responsibilities is to an appropriate

ContactsContacts

Pollyanna DeanePartnerT +44 20 7825 4303Esimmons.com

Laura AllenAssociateT +44 20 7825 4636E [email protected]

Philip BartlettPartnerT +44 20 7825 4470E [email protected]

Andrea FinnPartnerT +44 20 7825 3915E [email protected]

PennyPartnerT +44 20 7825 3532E [email protected]

Pollyanna DeanePartnerT +44 20 7825 4303E [email protected]

Laura AllenAssociateT +44 20 7825 4636E [email protected]

Philip BartlettPartnerT +44 20 7825 4470E [email protected]

Andrea FinnPartnerT +44 20 7825 3915E [email protected]

Penny MillerPartnerT +44 20 7825 3532E [email protected]

Pollyanna Deane

T +44 20 7825 4303pollyanna.deane@simmons

simmons.com

T +44 20 7825 4636E [email protected]

Philip Bartlett



Miller


13

pollyanna.deane@simmons-

-

E philip.bartlett@simmons-

E andrea.finn@simmons-

E penny.miller@simmons-

Emma SutcliffePartnerT +44 20 7825 4250E [email protected]

Julian TaylorPartnerT +44 20 7825 4431E [email protected]

Adam BlairSupervising AssociateT +44 20 7825 4251E [email protected]

Peter LockwoodSupervising AssociateT +44 20 7825 4210E [email protected]


Emma SutcliffePartnerT +44 20 7825 4250E [email protected]

Julian TaylorPartnerT +44 20 7825 4431E [email protected]

Adam BlairSupervising AssociateT +44 20 7825 4251E [email protected]

Peter LockwoodSupervising AssociateT +44 20 7825 4210E [email protected]


T +44 20 7825 4250E emma.sutcliffe@simmons

T +44 20 7825 4431E julian.taylor@simmons-

Supervising AssociateT +44 20 7825 4251E adam.blair@simmons-

Supervising AssociateT +44 20 7825 4210E peter.lockwood@simmons


E emma.sutcliffe@simmons-

E peter.lockwood@simmons-

mailto:[email protected]

mailto:[email protected]

Offices

AmsterdamSimmons & Simmons LLPPO Box 79023 1070 NBClaude Debussylaan 247 1082 MC AmsterdamThe NetherlandsT +31 20 722 2500 F +31 20 722 2599

BeijingSimmons & Simmons33rd Floor China World Tower A1 Jianguomenwai AvenueBeijing 100004 People’s Republic of ChinaT +86 10 8588 4500 F +86 10 8588 4588

BristolSimmons & Simmons LLPOne Linear Park Temple QuayBristol BS2 0PS United KingdomT +44 20 7628 2020

BrusselsSimmons & Simmons LLPAvenue Louise/Louizalaan 143 1050 Brussels BelgiumT +32 2 542 09 60 F +32 2 542 09 61

DohaSimmons & Simmons Middle East LLPLevel 5 Al Mirqab Tower Al Corniche StreetPO Box 23540 Doha State of QatarT +974 4409 6700 F +974 4409 6701

DubaiSimmons & Simmons Middle East LLPLevel 7 The Gate Village Building 10Dubai International Financial CentrePO Box 506688 Dubai United Arab EmiratesT +971 4 709 6600 F +971 4 709 6601

DüsseldorfSimmons & Simmons LLPKö-BogenKönigsallee 2a40212 Düsseldorf GermanyT +49 2 11-4 70 53

FrankfurtSimmons & Simmons LLPMesseTurm Friedrich60308 Frankfurt am Main GermanyT +49 69-90 74 54

Hong KongSimmons & Simmons13th Floor One Pacific Place88 Queensway Hong KongT +852 2868 1131 F +852 2810 5040

JeddahHammad & AlOffice #1209, King Road Tower, Malik Road,PO Box 864 Jeddah 21421Kingdom of Saudi ArabiaT +966 92 000 4626 F +966 2 606 9190

LisbonSociedade Rebelo de Sousa in association withSimmons & SimmonsRua D. Francisco Manuel de Melo 211070-085 Lisbon PortugalT +351 21 313 2000 F +351 21 313 2001

Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and itsand the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of tmember of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individualpractices. For further inf

Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC352713 and with its regiauthorised and regulated by the Solicitors Regulation Authority.

A list of members and other partners together with their professional qualifications is available for inspection at the above

Offices

AmsterdamSimmons & Simmons LLPPO Box 79023 1070 NBClaude Debussylaan 247 1082 MC AmsterdamThe NetherlandsT +31 20 722 2500 F +31 20 722 2599

Simmons33rd Floor China World Tower A1 Jianguomenwai AvenueBeijing 100004 People’s Republic of ChinaT +86 10 8588 4500 F +86 10 8588 4588

Simmons & Simmons LLPOne Linear Park Temple QuayBristol BS2 0PS United KingdomT +44 20 7628 2020 F +44 20 7628 2070

Simmons & Simmons LLPAvenue Louise/Louizalaan 143 1050 Brussels BelgiumT +32 2 542 09 60 F +32 2 542 09 61

Simmons & Simmons Middle East LLPLevel 5 Al Mirqab Tower Al Corniche StreetPO Box 23540 Doha State of Qatar

974 4409 6700 F +974 4409 6701

Simmons & Simmons Middle East LLPLevel 7 The Gate Village Building 10Dubai International Financial CentrePO Box 506688 Dubai United Arab EmiratesT +971 4 709 6600 F +971 4 709 6601

DüsseldorfSimmons & Simmons LLP

Königsallee 2a40212 Düsseldorf Germany

4 70 53-0 F +49 2 11-4 70 53

Simmons & Simmons LLPMesseTurm Friedrich-Ebert-Anlage 4960308 Frankfurt am Main Germany

90 74 54-0 F +49 69-90 74 54

Hong KongSimmons

13th Floor One Pacific Place88 Queensway Hong KongT +852 2868 1131 F +852 2810 5040

Hammad & Al-Mehdar in alliance with Simmons & SimmonsOffice #1209, King Road Tower, Malik Road,PO Box 864 Jeddah 21421Kingdom of Saudi Arabia

+966 92 000 4626 F +966 2 606 9190

Sociedade Rebelo de Sousa in association withSimmons & SimmonsRua D. Francisco Manuel de Melo 21

085 Lisbon PortugalT +351 21 313 2000 F +351 21 313 2001

Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and itsand the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of tmember of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individualpractices. For further information on the international entities and practices, refer to simmons



Claude Debussylaan 247 1082 MC Amsterdam

T +31 20 722 2500 F +31 20 722 2599

Beijing 100004 People’s Republic of ChinaT +86 10 8588 4500 F +86 10 8588 4588

F +44 20 7628 2070

Avenue Louise/Louizalaan 143 1050 Brussels BelgiumT +32 2 542 09 60 F +32 2 542 09 61

Simmons & Simmons Middle East LLPLevel 5 Al Mirqab Tower Al Corniche StreetPO Box 23540 Doha State of Qatar

974 4409 6700 F +974 4409 6701

Simmons & Simmons Middle East LLPLevel 7 The Gate Village Building 10Dubai International Financial CentrePO Box 506688 Dubai United Arab EmiratesT +971 4 709 6600 F +971 4 709 6601

4 70 53-53

Anlage 4960308 Frankfurt am Main Germany

90 74 54-54

T +852 2868 1131 F +852 2810 5040

Mehdar in alliance with Simmons & SimmonsOffice #1209, King Road Tower, Malik Road,

+966 92 000 4626 F +966 2 606 9190

Sociedade Rebelo de Sousa in association with

Rua D. Francisco Manuel de Melo 21

T +351 21 313 2000 F +351 21 313 2001

Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and itsand the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of tmember of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual

ormation on the international entities and practices, refer to simmons



Mehdar in alliance with Simmons & Simmons

Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and itsand the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of tmember of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual

ormation on the international entities and practices, refer to simmons



14

LondonSimmons & Simmons LLPCityPoint OneLondon EC2Y 9SS United KingdomT +44 20 7628 2020 F +44 20 7628 2070

LuxembourgSimmons & Simmons Luxembourg LLPRoyal Monterey 26A Boulevard RoyalLuxembourg LT +352 26 21 16 01 F +352 26 21 16 02

MadridSimmons & SimmonsCalle Miguel Angel 11 5th floor 28010 Madrid SpainT +34 91 426 2640 F +34 91 578 2157

MilanStudio Legale Associato in affiliation withSimmons & Simmons LLPVia Tommaso Grossi 2 20121 Milan ItalyT +39 02 72505.1 F +39 02 72505.505

MunichSimmons & Simmons LLPLehel Carré, Thierschplatz 680538 Munich GermanyT +49 89

ParisSimmons & Simmons LLP5 boulevard de la Madeleine 75001 Paris FranceT +33 1 53 29 16 29 F +33 1 53 29 16 30

RiyadhHammad & AlLevel 18 Princess AlKing Fahad Road OlayaRiyadh Kingdom of Saudi ArabiaT +966 92 000 4626 F +966 12 606 9190

ShanghaiSimmons & Simmons42nd Floor Wheelock SquareNo. 1717 Nan Jing West RoadShanghai 200040 ChinaT +86 21 6249 0700 F +86 21 6249 0706

SingaporeSimmons & Simmons Asia LLP168 Robinson Road #11Capital TowerSingapore 068912T +65 6831 5600 F +65 6831 5688

TokyoSimmons & Simmons Gaikokuho Jimu Bengoshi Jimusho(Gaikokuho23rd floor Roppongi Hills Mori Tower6-10-1 Roppongi MinatoT +81 3 6438 5255 F +81 3 6438 5256

Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLPand the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of tmember of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual

ormation on the international entities and practices, refer to simmons-simmons.com/legalresp

Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC352713 and with its regi


LondonSimmons & Simmons LLPCityPoint One Ropemaker StreetLondon EC2Y 9SS United KingdomT +44 20 7628 2020 F +44 20 7628 2070

LuxembourgSimmons & Simmons Luxembourg LLPRoyal Monterey 26A Boulevard RoyalLuxembourg L-2429 LuxembourgT +352 26 21 16 01 F +352 26 21 16 02

MadridSimmons & Simmons LLPCalle Miguel Angel 11 5th floor 28010 Madrid SpainT +34 91 426 2640 F +34 91 578 2157

MilanStudio Legale Associato in affiliation withSimmons & Simmons LLPVia Tommaso Grossi 2 20121 Milan ItalyT +39 02 72505.1 F +39 02 72505.505

MunichSimmons & Simmons LLPLehel Carré, Thierschplatz 680538 Munich GermanyT +49 89-20 80 77 63-00 F +49 89

Simmons & Simmons LLP5 boulevard de la Madeleine 75001 Paris FranceT +33 1 53 29 16 29 F +33 1 53 29 16 30

RiyadhHammad & Al-Mehdar in alliance with Simmons & SimmonsLevel 18 Princess Al-Anood Tower 2King Fahad Road OlayaRiyadh Kingdom of Saudi ArabiaT +966 92 000 4626 F +966 12 606 9190

ShanghaiSimmons & Simmons42nd Floor Wheelock SquareNo. 1717 Nan Jing West Road

hai 200040 ChinaT +86 21 6249 0700 F +86 21 6249 0706

SingaporeSimmons & Simmons Asia LLP168 Robinson Road #11-01Capital TowerSingapore 068912T +65 6831 5600 F +65 6831 5688

TokyoSimmons & Simmons Gaikokuho Jimu Bengoshi Jimusho(Gaikokuho Joint Enterprise TMI Associates)23rd floor Roppongi Hills Mori Tower

1 Roppongi Minato-ku Tokyo 106T +81 3 6438 5255 F +81 3 6438 5256

affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLPand the other partnerships and other entities or practices authorised to use the name “Simmons & Simmons” or one or more of t hose practices as the context requirmember of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP’s affiliated

simmons.com/legalresp

Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC352713 and with its regi stered office at CityPoint, One Ropema

A list of members and other partners together with their professional qualifications is available for inspection at the above address.

Ropemaker StreetLondon EC2Y 9SS United KingdomT +44 20 7628 2020 F +44 20 7628 2070

Simmons & Simmons Luxembourg LLPRoyal Monterey 26A Boulevard Royal

2429 LuxembourgT +352 26 21 16 01 F +352 26 21 16 02

Calle Miguel Angel 11 5th floor 28010 Madrid SpainT +34 91 426 2640 F +34 91 578 2157

Studio Legale Associato in affiliation with

Via Tommaso Grossi 2 20121 Milan ItalyT +39 02 72505.1 F +39 02 72505.505

00 F +49 89-20 80 77 63

5 boulevard de la Madeleine 75001 Paris FranceT +33 1 53 29 16 29 F +33 1 53 29 16 30

hdar in alliance with Simmons & SimmonsAnood Tower 2

Riyadh Kingdom of Saudi ArabiaT +966 92 000 4626 F +966 12 606 9190

42nd Floor Wheelock SquareNo. 1717 Nan Jing West Road

T +86 21 6249 0700 F +86 21 6249 0706

Simmons & Simmons Asia LLP01

T +65 6831 5600 F +65 6831 5688

Simmons & Simmons Gaikokuho Jimu Bengoshi JimushoJoint Enterprise TMI Associates)

23rd floor Roppongi Hills Mori Towerku Tokyo 106-6123 Japan

T +81 3 6438 5255 F +81 3 6438 5256

affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLPhose practices as the context requirwith equivalent status in one of Simmons & Simmons LLP’s affiliated

stered office at CityPoint, One Ropema


Calle Miguel Angel 11 5th floor 28010 Madrid Spain

20 80 77 63-01

5 boulevard de la Madeleine 75001 Paris France

hdar in alliance with Simmons & Simmons

Simmons & Simmons Gaikokuho Jimu Bengoshi Jimusho

6123 Japan

affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLPhose practices as the context requires. The word “partner” refers to awith equivalent status in one of Simmons & Simmons LLP’s affiliated

stered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is


affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLPes. The word “partner” refers to a

with equivalent status in one of Simmons & Simmons LLP’s affiliated

ker Street, London EC2Y 9SS. It is


affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP

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