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FCA Finalised Guidance: SM&CR Responsibilites - Statements & Mapping

11th March 2019

Senior Managers & Certification Regime: Responsibilities

The Regulator has now published their finalised guidance (FG19/2) on Statements of Responsibility and Responsibilities Maps for Firms preparing for the Senior Managers & Certification Regime (SM&CR).

Whilst many firms within financial services, will already be subject to the SM&CR - such as banks and insurers - the majority those not yet subject to SM&CR will become so come 9th December 2019 when it begins to apply for solo-regulated firms.

The guidance offered by the FCA in FG19/2 aims to provide practical help and information for those firms currently preparing to adopt the SMCR, and should be read alongside the FCA’s Guide for FCA-solo-regulated firms, as well as the applicable Handbook rules and guidance.

As a reminder, as with all Guidance papers that are issues, they are not a substitute for reading and applying the relevant rules from the Handbook, however it will be a useful source of reference for helping firms in their SM&CR preparations. Especially since it outlines some examples of good and bad practices, as well as poses questions that firms should consider.

• FG19/2: SM&CR Guidance on statements of responsibilities and Responsibilities Maps for FCA firms

SM&CR Requirements:

As many of those knee-deep in SM&CR preparations will know, under the Senior Managers & Certification Regime, all Senior Managers must have a Statement of Responsibility (SoR) and in fact, preparing this and ensuring it is maintained and up to date is a legal requirement for individuals that are Senior Managers.

Responsibilities on a Statement of Responsibility (SoR) may be either fall under those described as ‘Prescribed Responsibilities’ or those of ‘Other Responsibilities’. It should be noted that some Senior Manager’s may have one or both types of responsibilities.

Some examples of Prescribed Responsibilities include the responsibility for the firm’s performance of its obligations under the Senior Manager’s Regime as well as:

• The responsibility for the firm’s performance of its obligations under the certification regime;
• The responsibility for the firm’s obligations for conduct rules training;
• The responsibility for the firm’s obligations for conduct rules reporting; and
• Overall Responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime

In preparing compliant Statements of Responsibility, your firm should consider if those responsibilities detailed are applicable and appropriate for the type of firm that they are and:

• Whether the Prescribed Responsibilities are appropriate for the role they have been allocated to?; and
• Whether, if any of those responsibilities are shared with another Senior Manager, if that is appropriate, and whether is it clear who has ultimate responsibility?

Responsibilities Mapping:

In addition to Statements of Responsibility, those firms that fall within the Enhanced SM&CR category will also need to have a Responsibilities Map drawn up for their firm. (See here for more information on SM&CR Types of Firm)

A Responsibilities Map should provide an overview of how a firm is managed and governed and should be clear and easy for both the regulator and anyone who works at the firm to understand.

Key information to be included on the Responsibilities Map includes information about governance bodies, senior management reporting lines and Senior Manager’s responsibilities. Most likely it will be best represented using both graphics and text and, if your firm is part of a group, should clearly show how the firm relates to the rest of the group.

Next Steps:

Ensuring you have comprehensive and coherent documentation in place is vital to ensure your firm is ready and compliant with SM&CR requirements. Firms should ultimately ask themselves if someone who doesn’t know how your firm is organised and what individuals do there, would be able to clearly ascertain these points from the paperwork you put in place?

If you are preparing for the extension of the SM&CR regime for your firm and need any support or assistance, our experienced consultants would be happy to offer their assistance and practical support. Just drop our friendly team a line.

Related Reading:

• SM&CR: Types of Firm
• Advice for Solo-regulated Firms Adopting SM&CR
• CP19/4: Optimising the Senior Managers & Certification Regime
• SM&CR: Statement of Responsibilities & Responsibility Mapping
• SMCR to be Extended to all FCA Firms in December 2019

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