The new Financial Conduct Authority (FCA) Senior Managers and Certification Scheme is a new piece of regulation from the FCA which is soon going to replace the current FCA Approved Persons Regime.
Under the current Approved Persons Regime (valid until 8th December 2019), if your firm has previously applied for it to be authorised and regulated by the FCA, your Director(s) had to become fully FCA “Approved Persons. Essentially, the FCA vetted these people to determine whether they were fit and proper to run regulated businesses. Under the Approved Persons Regime, the responsibility for a business complying with the FCA regulations sat with those approved persons (and for many businesses this was actually just one person, such as the Managing Director). Over the years the FCA found that this approach resulted in other senior staff members not always taking responsibility or accountability for their business areas, resulting in potential and actual customer harm. The purpose of the new FCA Senior Managers and Certification Scheme is to make key individuals more responsible and accountable for their own actions, as well as the actions of their business areas which should then improve conduct.
As far as the FCA are concerned every senior manager has a duty of responsibility to ensure that the business which they work for are compliant with the FCA’s regulations. If a business, or an individual working for or operating on behalf of a business, breaches the regulations, senior managers can be held individually accountable by the FCA if reasonable steps have not been taken by them and/or their business to prevent or stop the breach. There is also a duty of responsibility to notify the FCA of breaches without undue delay. The FCA can take enforcement action against individuals personally who are senior managers for breaches of regulation in your business. This can include:
• Personal fines (must be paid out of your own funds and the business cannot help/ contribute to the payment).
• Removal of your authorisation to act as a senior manager in an FCA regulated firm.
• Banning or suspending you from working in any industry regulated by the FCA.
• Bringing criminal proceedings against you.
The FCA can also take enforcement action against the business itself. This can include:
• Fining the business.
• Suspending, cancelling or amending your FCA authorisation which will mean you will no longer be able to offer finance to your customers.
• There is also the risk of damage to your reputation as all FCA rulings are made public.
The new FCA Senior Managers Regime and the Senior Manager Functions (SMFs) will replace the controlled functions previously held by company directors under the Approved Persons Regime. The new FCA Certification Regime is designed to cover individuals within your business who are not of a senior manager level but have the potential to cause your business or your customers harm. Senior managers have to apply to be approved by the FCA, whereas Certification Regime staff do not. You, as a business, are required to conduct your own assessment and make your own judgements on whether an individual is suitable for the job.
It would be wise not to wait until 9th December 2020 to train your relevant staff on the new conduct rules under the new FCA Senior Managers and Certification Regime. Best to train them as soon as possible, because even though the FCA rules allow you to wait until December 2020, they will not allow for any rule breaches by your staff as a result of them not receiving training – remember, your senior managers are individually responsible to the FCA for the actions of your sales staff and any punishments or enforcement action imposed by the FCA could be handed out to those individuals.
As part of the new Senior Managers & Certification Regime that kicks in on 9th December 2019, the Financial Conduct Authority are also introducing a public register of individuals who hold senior manager functions or are Certification Regime staff. This is known as the “FCA Directory”. The idea of the register is to allow customers to see that key individuals representing the firms they are dealing with have been assessed to be fit and proper. It also allows firms to crosscheck references and stop unsuitable individuals from operating in financial services. The directory will be made available to the public from the 9th March 2020. The deadline for businesses to submit all information for all relevant individuals is the 9th December 2020. Hazlemere Window Company Ltd is Authorized and Regulated by the Financial Conduct Authority so are fully FCA Approved, with all six of it’s company’s Director being FCA Approved Persons, hence why it takes the new legislation and new Senior Managers and Certification Regime so seriously.
