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FCA releases plans to replace Approved Persons Regime

  • 26/07/2017
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FCA releases plans to replace Approved Persons Regime
The Financial Conduct Authority (FCA) has published details of how it proposes to extend the Senior Managers and Certification Regime (SM and CR) to all sectors of the financial services industry.

The regime will apply to all firms regulated by the FCA and everyone performing financial services roles at those institutions.

However, these proposals do not extend to approved persons and individuals at appointed representatives of affected firms – the FCA will consult later this year on how it intends the SM&CR to apply these individuals.

The regime has already been rolled-out to in-branch mortgage advisers as it has been cascaded through banking firms.


Proportionate regulation

The new regime will replace the current Approved Persons Regime with a focus on reducing harm to consumers and strengthening market integrity by making individuals more accountable for their conduct and competence.

The regulator said it was committed to ensuring the regime was proportionate according to the size of the firm.

Therefore, it has proposed applying a baseline of specific requirements to all regulated firms, called the core regime.

For the largest and most complex firms (fewer than 1% of regulated firms) the FCA proposes some extra requirements, under the enhanced regime.


Key points

The SM&CR aims to:

  • encourage a culture of staff at all levels taking personal responsibility for their actions;
  • make sure firms and staff clearly understand and can demonstrate where responsibility lies.


The FCA proposes three parts to the SM&CR:

  • Five Conduct Rules that will apply to all financial services staff at FCA authorised firms. This simple set of rules means that individuals must act with integrity, act with due care, skill and diligence, be open and cooperative with regulators, pay due regard to customer interests and treat them fairly, and observe proper standards of market conduct;
  • The responsibilities of Senior Managers will be clearly set out and, should something in their area of responsibility go wrong, they can be personally held to account. The Senior Managers will be approved by the FCA and appear on the FCA Register;
  • Under the Certification Regime, firms will certify individuals for their fitness, skill and propriety at least once a year, if they are not covered by the Senior Managers Regime but their jobs significantly impact customers or firms.


The consultation is open until 3 November and the regulator will announce an implementation date when it publishes its final rules next year.

FCA executive director of supervision – retail and authorisations Jonathan Davidson (pictured) said: “Culture and governance in financial services and its impact on consumer outcomes is a priority for the FCA.

“The extension of the Senior Managers and Certification Regime is key to driving forward culture change in firms.

“This is about individuals, not just institutions. The new Conduct Rules will ensure that individuals in financial services are held to high standards, and that consumers know what is required of the individuals they deal with.

“The regime will also ensure that Senior Managers are accountable both for their own actions, and for the actions of staff in the business areas that they lead,” he added.


More details of what the FCA is proposing can be found here.

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