SM&CR will replace the Financial Conduct Authority’s (FCA) existing Approved Persons Regime and comes into force from 9 December.
Lisa Martin, development director at TMA said while there was still time for firms to get ready, it was “essential” that intermediaries got up to speed on the requirements as a “matter of urgency”.
She said: “We understand that many firms are feeling daunted by the new regime and still aren’t sure how to prepare for it. The best approach to ensuring compliance is to break the changes down into digestible chunks and tackle them one-by-one.”
The expanded scope of the regime will place more responsibility and accountability with senior managers and other individuals working in almost all authorised firms – and mortgage advisers will account for a large proportion of those affected.
TMA is encouraging intermediaries that have not yet taken the necessary steps in order to prepare for SM&CR to complete their final preparations now.
Martin added: “It is in advisers’ best interests to understand the new rules and find the simplest and best possible route to preparing for them before the December deadline approaches.”
What needs to be done
According to TMA, there are five key areas advisers need to address ahead of the deadline:
- Familiarise yourselves with the new SM&CR requirements. Senior managers need to make sure that all staff clearly understand the new rules and their objectives before the deadline by reading through the FCA’s guide on this topic;
- Identify what type of firm you are. There are three categories: Enhanced, Core and Limited Scope. The size and structure of your firm will determine what you need to do under the new rules, so firms will need to assess which category they fall into based on the rules. Most intermediary firms will be subject to the Core regime;
- If you’re a senior manager such as a director, you will need to create a ‘Statement of Responsibilities’. This should clearly outline your role and responsibilities as a senior manager for the FCA and others in your firm to understand. As part of this, firms will also need to assign senior manager(s) in charge of the Prescribed Responsibilities as set out by the FCA to ensure they are accountable for key conduct risks;
- Identify members of staff who are subject to the Certification Regime (i.e. those working in roles with qualification requirements, such as mortgage advisers) and consider what processes need to be put in place to carry out assessments on these staff to ensure they are fit and proper to perform their roles. Assessments need to be carried out on a continual basis, and examples could include regular training sessions or quarterly one-on-one reviews;
- Make sure that all staff familiarise themselves with the new Conduct Rules and consider how to adequately train them on these. Split into two tiers, the first is a general set of rules called ‘Individual Conduct Rules’ which will apply to most employees in a firm, including those that are subject to the Certification Regime. The second tier of ‘Senior Manager Conduct Rules’ applies to senior managers only.