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SM&CR for Solo-Regulated Firms: Types of Firm

4th March 2019

FCA issues First Decision under Competition Law

Solo-regulated firms will be aware that the Senior Manager & Certification Regime will be extended to them this year, as of the 9th December 2019. The majority of firms will already have started their preparations for the SM&CR being extended to include them, however if your firm is yet to do so, the first step will be to determine which type of SM&CR firm you are.

What type of SM&CR Firm are you?

There are three types of SM&CR Firms:

• Limited Scope;
• Core SM&CR Firms; and
• Enhanced SM&CR Firms

Having gone through a consultation process last year, the FCA have now issued Guidance to the SM&CR for Solo-regulated Firms, that has a handy diagram for determining which of these types of SM&CR Firm you are.

In essence, if your firm is currently subject to a Limited Application of the Approved Persons Regime, then you will be a Limited Scope SM&CR Firm.

If however, the Approved Persons Regime fully applies your firm, then you will be a Core SM&CR Firm, unless you are one of the following:

• a Significant IFPRU firm
• a CASS Large Firm
• a firm with Assets Under Management of £50 billion or more as a three year rolling average
• a firm with total intermediary regulated business revenue of £35 million or more per annum, calculated as a three year rolling average
• a mortgage lender or administrator (that is not a bank) with 10,000 or more regulated mortgages outstanding

If any of the above applies to your firm, then you will be classed as an Enhanced SM&CR Firm.

The majority of solo-regulated firms will be classed as Core SM&CR Firms and will all have a standard baseline of SM&CR requirements applied to them upon implementation later this year, however, SM&CR requirements will vary for others classed as Limited Scope or Enhanced SM&CR firms.

What will it mean to be classed as a Limited Scope SM&CR Firm?

Limited Scope SM&CR Firms will be subject to fewer requirements than both Core and Enhanced SM&CR firms. Examples of those firms that may fall within Limited Scope SM&CR Firms might be: limited permission consumer credit firms

• Sole traders
• Authorised professional firms whose only regulated activities are non-mainstream regulated activities
• Oil market participants
• Service companies
• Energy market participants
• Subsidiaries of local authorities or registered social landlords; insurance intermediaries whose principal business is not insurance intermediation and who only have permission to carry on insurance mediation activity in relation to non-investment insurance contracts; Authorised internally managed Alternative Investment Funds AIFs)

What will it mean to be classed as an Enhanced SM&CR Firm?

A relatively small proportion of firms that are solo-regulated will be classified as an Enhanced SM&CR Firm. These firms will have to apply additional rules under SM&CR when it becomes effective for them on 9th December 2019.

SM&CR Next Steps for Solo-regulated Firms:

If your firm is starting to prepare for the Senior Managers & Certification Regime this coming December and would like some support or assistance in making your SM&CR preparations, please get in touch with our experienced professional team. We will be happy to support your firm with whatever requirements you might need, from training to assisting with Responsibilities mapping and ensuring coherent statements of responsibilities are in place.

Related Reading:

 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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