Shearman & Sterling LLP | FinReg | UK Conduct Regulator Publishes Guidance on Senior Managers and Certification Regime for Solo-Regulated Firms in Response to COVID-19
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  • UK Conduct Regulator Publishes Guidance on Senior Managers and Certification Regime for Solo-Regulated Firms in Response to COVID-19

    The U.K. Financial Conduct Authority has published guidance for solo-regulated firms on adherence to the Senior Managers and Certification Regime in light of COVID-19. The FCA has separately issued joint Guidance with the Prudential Regulation Authority on the SM&CR for dual-regulated firms.

    The FCA’s guidance for solo-regulated firms focuses in particular on the following areas:
    • Statements of Responsibilities: firms will not be expected to provide updated Statements of Responsibilities to notify the FCA of changes to those undertaking Senior Management Functions which are temporary and made in direct response to COVID-19 and where the firm expects to revert to its previous arrangements; internal records documenting which individuals are responsible for relevant Senior Management Functions should, however, be kept, and firms should notify the FCA via email or telephone of furloughed Senior Managers;
    • Temporary Arrangements for Senior Management Functions: the FCA plans to modify the “12-week rule” allowing an individual to be temporarily appointed to a Senior Management Function for up to 12 weeks without having been approved, so that a Senior Manager may be appointed on a temporary basis for up to 36 weeks; firms should still, where possible, allocate Prescribed Responsibilities to an approved Senior Manager; and
    • Furloughed staff: firms may choose to furlough Senior Managers, but the furloughed individual will retain their approval as a Senior Manager and the firm must continue to ensure the individual is fit and proper for that Senior Management Function if the intention is that they will eventually return to it. The responsibilities of the furloughed Senior Manager should be reallocated to another Senior Manager or temporarily to another individual in accordance with the 12-week rule. Those performing required functions should only be furloughed as a last resort and should be replaced until their return.

    The SM&CR guidance supplements the FCA’s previous statement confirming that firms are not expected to appoint a specific Senior Manager to take responsibility for the COVID-19 response. That statement was made in the context of more general information published on the FCA’s regulatory response to COVID-19 and the actions firms should take.

    View the FCA's Guidance for solo-regulated firms on SM&CR under COVID-19.

    View details of the FCA and PRA’s joint Guidance for dual-regulated firms on SM&CR under COVID-19.

    View our client note on “COVID-19: FCA Announcement on Key Workers in Financial Services and Other Issues”.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.

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