Guide to SM&CR

Guide to SM&CR

March 2019

Guide to SM&CR

As a leading provider of compliance and business support solutions to directly authorised firms, we are delighted to bring you this comprehensive guide to the Senior Managers and Certification Regime (SM&CR). If you have any questions about any of the subject matters, please call our Compliance Helpdesk on 0113 239 5347 or email [email protected] WE ARE HERE TO HELP.

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‘People capabilities are becoming more and more important to having the right culture. It’s not enough to be motivated to behave in a new way; people also need to understand how to be successful with the new behaviours. The accountability regime reinforces this view of culture and its key drivers. It sets a standard for the outcomes of culture and has an important impact on senior managers, on how a firm is governed and on people’s capabilities.’

‘Culture and conduct – extending the accountability regime”, speech by Jonathan Davidson Director of Supervision - Retail and Authorisations, FCA (September 2017)

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The Senior Managers and Certification Regime (‘SM&CR’)

Contents

Page no.

Page no.

1.0 Introduction 2.0 FCA Guide

12.0 Certification

04 05 05 05 06 06 07 07 07 07 08 09 09 09 11 12 13 13 14 14 15 16 10

16 17 17 17 17 18 18 19 19 20 20 21 24 24

13.0 ‘Fit and proper’ (F&P) 13.1 F&P Pass/Fail Criteria

2.1 Further FCA Material

2.2 FCA Handbook

13.2 There are some differences in applying F&P in Limited Scope firms:

2.3 Prescribed Responsibilities

13.3 Record Keeping

2.4 Questions

13.4 Non-Financial Conduct

3.0 Extension of SM&CR 3.1 Employment law 4.0 Project planning

13.5 What happens if an individual is not or may not be fit and proper?

14.0 Questions firms need to ask

4.1 Topics not covered by this Guidance

15.0 Conduct rules

5.0 FCA Guide: Working out your SM&CR firm type

16.0 Training requirements

5.1 Core firms – FCA’s expectations

17.0 Conduct rule breach reporting 18.0 Enforcement and the SM&CR

5.2 Limited Scope Firms – FCA’s Expectations 5.3 FCA Guide: The Senior Managers Regime - overview for firms 5.4 FCA Guide: How the Senior Managers Regime applies to Core firms

Appendix A: Source material

Appendix B Questions to consider when implementing SM&CR by topic Appendix C Training and competence – Briefing for firms Appendix D: Senior Manager Certificate Example Template Appendix E: High Level Checklist Core Firms Appendix F: High Level Checklist Limited Scope Firms

25

6.0 Statement of Responsibilities (SoRs)

6.1 The Duty of Responsibility 7.0 Responsibilities Maps

28

30 31

8.0 Certification Regime

9.0 Criminal records checks for Senior Managers

9.1 Criminal records checks 10.0 Regulatory References

Appendix G: Suggested Timeline

32

11.0 Authorised firm is responsible for an individual’s fitness and propriety not FCA

DO YOU NEED FURTHER HELP OR SUPPORT? If you have any questions about any of the subject matters, please call our Compliance Helpdesk on 0113 239 5347 or email [email protected] If you would like more details about any of our support services, please speak to your Account Manager. Alternatively, you can speak to your Regulatory Consultant if you have subscribed to a service which includes access to one.

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1.0 Introduction

The SM&CR will apply to every FCA regulated firm and will apply personal accountability and obligations on almost all personnel working in the regulated financial services sector in the UK. It has been designed and brought in to increase individual accountability and responsibility throughout the sector. The SM&CR will replace the existing “Approved Persons” regime, however, the FCA has confirmed that the Appointed Representative’s (ARs) regime will remain in place and unchanged by SM&CR. We would expect this to change in the future but legislation would be required in order to bring in ARs and so this is not currently on the change horizon. Whilst the SM&CR has been hovering in the background for some time, other more pressing developments have been attracting larger headlines and bandwidth (e.g. Brexit, MIFID II, Insurance Distribution Directive, British Steel and DB transfers). The principal effect of recent FCA policy statements has been to set a hard timeframe for the commencement of the SM&CR. We expect that this will focus minds and allow firms to plan for the SM&CR’s impact with a welcome degree of certainty. SM&CR has already been implemented in the banking sector and will come into force for investment firms on 9 December 2019. SM&CR will be a major project for all firms, large and small, and will impact in some form on the majority of staff working within investment firms.

‘It is never too soon to start. The clarity of responsibility you must articulate in statements will help you run your business better...Take the opportunity to think about who is in the top team. Are sales people who have risen to the top the right people to be leading? There is an opportunity for the firm to make changes.” David Blunt - Head of Conduct Specialists – FCA. This guidance has been drafted following consultation with our Select client base most of which will be core firms plus a number of smaller enterprises that will fall into the limited scope regime. The FCA’s Guide, referred to subsequently, explains the different types of SM&CR firms. We will review our guidance as and when further issues are identified as firms begin to prepare for the implementation of the regime and in the light of any further guidance from the FCA or relevant professional bodies. We welcome your feedback on the content of our guidance particularly where you identify issues not addressed in the guidance. The contact email is SelectManagement@ tenetgroup.co.uk please put SM&CR in the email heading. It is the clear intention of the FCA to hold senior individuals within firms accountable for the compliance and conduct in their areas or responsibility and so the extension of the SM&CR is not only a compliance change, but a cultural one as well, with concern about how business is done as well as what business is done.

This accountability looks like:

Please note: The definition of an employee is widely drawn and includes those who: • Personally provides services to the firm under an arrangement made between the firm and the individual (e.g. the self employed adviser under a contract for services arrangement) • Is subject to (or to the right of) supervision, direction or control by the firm as to the manner in which those services are provided (this could have an impact on outsourcing arrangements). A Senior Management Function is a new type of controlled function under FSMA. It is defined as ‘in relation to the carrying on of a regulated activity by a firm, which will require the person performing it to be responsible for managing one or more aspects of the firm’s affairs, so far as relating to the activity, and those aspects involve, or might involve, a risk of serious consequences for the firm, or for business or other interests in the United Kingdom’. A person who holds a Senior Management Function under this regime is a ‘Senior Manager’. Senior Managers are the most senior people in a firm with the greatest potential to cause harm or impact upon market integrity. This applies to people who perform certain functions, known as Certification Functions, but are not Senior Managers. FSMA defines a Certification Function as ‘one that requires the person performing it to be involved in one or more aspects of the firm’s affairs, so far as relating to a regulated activity, and those aspects involve, or might involve, a risk of significant harm to the firm or any of its customers’. These are basic rules that will apply to almost every person who works in financial services. They include things like ‘acting with integrity’ and ‘treating customers fairly’. The Conduct Rules are about improving the behaviour of all staff in financial services firms. Certification Regime Conduct Rules Senior Managers Regime

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2.0 FCA Guide

2.1 Further FCA Material The FCA has issued a guidance consultation which can be found at www.fca.org.uk/publication/guidance-consultation/ gc18-04.pdf The FCA may release further material and if relevant we will update the guide once the new material is published. A list of source material is set out at Appendix A. 2.2 FCA Handbook Certain references to the FCA Handbook can only be found by setting a future date using the functionality on the left hand side of the Handbook; we have used a set date of 10/12/2019. If you do encounter problems do let us know by speaking to your regulatory consultant or account manager.

The FCA has produced a document entitled ‘The Senior Managers and Certification Regime: Guide for FCA solo-regulated firms’ (see www.fca.org.uk/publication/policy/guide- for-fca-solo-regulated-firms.pdf). Our guidance supplements the FCA’s document which contains lots of useful information to which this is in essence an expansion pack. As a starting point therefore firms should make sure they are conversant with the FCA’s guidance document and COCON the section of the FCA’s Handbook dealing with Code of Conduct available here https://www. handbook.fca.org.uk/handbook/COCON.pdf.

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2.3 Prescribed Responsibilities The FCA has specified a number of ‘prescribed responsibilities’ covering key conduct and prudential risks which need to be assigned to senior manager functions and incorporated within their statements of responsibility (see SYSC 4.7.7R). Those allocated a prescribed responsibility need the skills, competence and necessary authority to be able to discharge it properly. Prescribed responsibilities should therefore not be normally shared or divided.

Prescribed responsibilities do not apply to limited scope firms.

Limited Firms

Core Firms

Prescribed Responsibility reference and description

Performance by the firm of its obligations under the Senior Managers Regime, including implementation and oversight

(a)

3 3

(b)

Performance by the firm of its obligations under the Certification Regime

3 3

(b-1) Performance by the firm of its obligations in respect of notifications and training of the Conduct Rules

3 3

Cannot be allocated to SMF 18 (Other Overall Responsibility)

Responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime

(d)

3 3

Can be allocated to SMF18

(z)

Responsibilities for the firm’s compliance with CASS (if applicable)

3 3

(c)

Compliance with the rules relating to the firm’s Responsibilities Map

Executive director

7

7

Safeguarding and overseeing the independence and performance of the internal audit function (in accordance with SYSC 6.2) Safeguarding and overseeing the independence and performance of the compliance function (in accordance with SYSC 6.1) Safeguarding and overseeing the independence and performance of the risk function (in accordance with SYSC7.1.21R and SYSC 7.1.22R) If the firm outsources its internal audit function, taking reasonable steps to ensure that every person involved in the performance of the service is independent from the persons who perform external audit

(j)

NED, if possible

7

7

NED, if possible

(k)

7

7

NED, if possible

(l)

7

7

Executive director

(j-3)

7

7

(t)

Developing and maintaining the firm’s business model

Executive director

7

7

Managing the firm’s internal stress tests and ensuring the accuracy of the timeliness of information provided to the FCA for the purposes of stress testing

(s)

Executive director

7

7

2.4 Questions The FCA’s Guide and this guidance contains questions firms may wish to consider. A consolidated list of the questions is set out at Appendix B.

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4.0  Project Planning The FCA expects firms to implement the requirements of SM&CR properly and on time (by the 9th December 2019). This may mean that you need to establish a project plan to enable SM&CR. The size, and the nature and extent of the activities undertaken varies within the Select clientele. Factors that firms will need to consider in establishing a project plan are set out below: A member of the firm’s governing body (i.e. a Principal/Director or Partner) needs to own the project; The governing body will need regular reports on the progress of the project. The reporting lines within the project team should be clear. Action and decisions should be clearly documented and actions monitored to completion. SM&CR is a business issue impacting, in varying degrees, on most staff across the firm– it cannot be treated simply as a compliance or HR issue even if you had sufficient scale to have either or both of these departments in your organisational structure. An efficient and successful implementation will involve staff from across the firm; and Implementing SM&CR may require extensive discussions with staff members. Ensuring such discussions take place at an appropriate time is important in terms of ensuring the SM&CR deadlines are met. We understand that when implemented in the banking sector, they originally underestimated the amount of time needed to identify Senior Managers and agree with them their responsibilities and engagement with other staff. If you need help in getting your firm SM&CR ready then do speak to your Regulatory Consultant. 3.1 Employment law For the avoidance of doubt, the purpose of this guidance is to assist firms understand and meet their regulatory obligations under SM&CR. The content should not be construed as offering any guidance on firms’ obligations under employment law. Where there may also be employment law issues to consider we have referred to this in the guidance but you may need to take your own legal advice in this area. You should note that the fact you may have satisfied yourselves that you have met your obligations under the FCA rules in addressing a specific issue, does not necessarily mean you have met all their obligations under employment law. By way of background, firms should be aware that the extension SM&CR is governed by law and the FCA’s Handbook is being changed, in part, to implement the legislation. Certain aspects of SM&CR, such as the application of the rules to very small firms, is driven by the content of the legislation, not the FCA. 3.0  Extension of SM&CR

4.1 Topics not covered by this Guidance We do not address the following sections of the FCA’s Guide:- 7: How the Senior Managers Regime applies to enhanced firms 8: How the Senior Managers Regime applies to branches 15: Enhanced firms - Converting existing approvals

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5.0  FCA Guide: Working out your SM&CR firm type

Core and enhanced firms The guide sets out on page seven a tool to determine whether your firm is a core or limited scope firm. The majority of firms we deal with will be core firms. Enhanced firms are generally larger firms e.g. TenetConnect Limited is subject to the enhanced regime. For the avoidance of doubt, where a firm is part of a group the determination of firm’s category is determined by at individual legal entity level. Firms can if they wish, opt into a ‘higher tier regime’ for example a core firm can elect to be an enhanced firm. Some larger core firms and/or firms that are part of a group (such as Tenet) are considering this option in order to have a single operating framework to maintain. The FCA have indicated that they will contact firms ahead of the transition to SM&CR with its own assessment of the firm’s status based on the information held. This should be considered as indicative rather than definitive as firms are responsible for determining into which regime they actually fall.

Are you a �rm that is currently exempt from the Approved Persons Regime?

You are not an SM&CR �rm

Yes

No

Are you a �rm that is currently subject to a limited application of the Approved Persons Regime?

You are a Limited Scope SM&CR �rm

Yes

No

You are a Core SM&CR �rm unless one of the following applies:

You are a �rm with total intermediary regulated business revenue of £35 million or more per annum, calculated as a three year rolling average

You are a �rm with annual revenue generated by regulated consumer credit lending of £100m or more calculated as a three year rolling average

You are a mortgage lender or administrator (that is not a bank) with 10,000 or more regulated mortgages outstanding

You are a �rmwith Assets Under Management of £50 billion or more as a three year rolling average

You are a Signi�cant IFPRU �rm

You are a CASS Large �rm

You are an Enhanced SM&CR �rm

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5.1 Core firms – FCA’s expectations A Senior Manager in a core firm may not necessarily have any prescribed responsibilities but as firms you should be careful to ensure that the workload is appropriately shared amongst the governing body. If a firm does not need to have someone in the compliance oversight or money laundering reporting officer (MLRO) functions under the Approved Persons Regime (APR), they will not need to under the SM&CR. Firms should already know whether these functions apply to them or not. Other responsibilities could be anything not covered by the prescribed responsibilities but would typically cover business functions and activities for which they are accountable, such as sales, customer services, information technology and potentially specific business transformation projects such as redesigning and relaunching the business proposition model. 5.2 Limited Scope Firms – FCA’s Expectations The criteria for Limited Scope firms mirrors how the FCA

applies the APR at the moment. Under the APR, firms with certain permissions do not need to apply some of the controlled functions. Firms that fall into this category will be subject to fewer requirements than Core firms. This definition covers all firms that currently have a limited application of the APR, including: all sole traders; authorised professional firms whose only regulated activities are non-mainstream regulated activities (e.g. accountants); 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 (e.g. vets distributing pet insurance or dentists distributing dental insurance); authorised internally managed Alternative Investment Funds (AIFs); and limited permission consumer credit firms. As with core firms, if a firm doesn’t need to have someone in the compliance oversight or MLRO functions under the Approved Persons Regime (APR), they will not need to under the SM&CR.

5.3 FCA Guide: The Senior Managers Regime - overview for firms As previously mentioned, this guidance should help you understand and apply ‘The Senior Managers and Certification Regime: Guide for FCA solo-regulated firms’. The table below summarises the key components set out in the guide:-

Regime

Core Firms

Limited Scope Firms

• Senior Management Functions (SMFs) in scope will include: − SMF9 Chair − SMF1 CEO − SMF3 Executive Director − SMF27 Partner − SMF16 Compliance Oversight − SMF17 MLRO • Six Prescribed Responsibilities to be allocated • Senior Managers subject to the ‘duty of responsibility’

• Senior Management Functions (SMFs) in scope will include: − SMF29 Limited Scope function −SMF16 Compliance Oversight − SMF17 MLRO

Senior Managers Regime

• All employees performing regulated activities who are not SMFs who can cause ‘significant harm’ including significant management functions, prop traders, CASS oversight, functions requiring qualifications, client dealing functions, algorithmic traders, material risk takers, anyone who supervises or managers any of the above. • Firms will need to certify that this population is Fit and Proper to carry out their role annually • This will also capture mortgage advisers who may be present in financial planning firms with a “full service” proposition • Five conduct rules applicable to all staff working at the firm, with the exception of ancillary staff, including notified NEDs • Four additional conduct rules applicable to Senior Managers • All breaches of Conduct Rules must be reported to the regulator

• No different requirements

Certification Regime

• No different requirements

Conduct Rules

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5.4 FCA Guide: How the Senior Managers Regime applies to core firms The Senior Managers Regime This section covers core firms. Senior Management Functions (SMFs) SMFs are the most senior people in a firm with the greatest potential to cause harm or impact upon market integrity. The FCA want to know who a firm’s most senior decision makers are, and to make sure firms clearly allocate responsibilities to those key individuals. The rules identify what roles within a firm are deemed to be SMFs. There are different requirements for core and limited scope firms.

FCA Feedback to banks The FCA will want to satisfy themselves that the individuals identified as SMs are genuinely SMs having regard to the firm’s governance arrangements. In the feedback to banks the FCA said that in a few cases, it was not clear whether firms had identified sufficiently senior individuals to hold Senior Management Functions or particular responsibilities. Examples included where one SMF manager reports to another or where SMF managers do not appear to have sufficient seniority, resources or authority to discharge their responsibilities effectively. The identification of SMFs is not straightforward. In determining the number of SMRs firms should consider that a disproportionate burden is not placed on a small number of individuals.

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6.0  Statement of

Responsibilities (SoRs)

Factors to consider when reviewing all completed SoRs prior to submission:- Have the firm’s documented reporting lines and governance arrangements been updated to reflect any changes to or clarification of responsibilities arising from the production of the SoRs? For example, is the SMF chairing relevant internal committees? It would be a good idea to map out your current organisation chart as a starting point but be prepared to redraw this as you develop your thinking. Are there any gaps, underlaps or overlaps of responsibilities? FCA feedback on their review of SoRs under the banking regime – examples of poor practice Some firms submitted SoRs with additional information that was either not relevant to the individual’s responsibilities or which focused on how the individual discharged their responsibilities, rather than what they were actually responsible for. In some cases this appears to limit or caveat the responsibility to particular activities, which could result in a lack of clarity or gaps in responsibilities. In other cases, not enough information was given to be able to understand what the SMF manager was responsible for. For example, we have seen cases where job titles have been given as overall responsibilities without sufficient information for us to understand which business functions and activities fall into the SMF manager’s overall responsibilities.

A SoR is a single document that every Senior Manager will need to have, clearly setting out their role and responsibilities. This is required under FSMA. Firms need to produce a SoR for each SMF. In addition, the FCA has identified certain prescribed responsibilities that must be allocated to a SMF. For some SMFs their responsibilities will be a mixture of prescribed and other responsibilities and for other SMF their responsibilities may not include any prescribed responsibilities. Other responsibilities - Our understanding is that ‘other responsibilities’ are those relating to the regulated activities of the firm. For example, if an SMR was responsible for ensuring the firm met their obligations under the health and safety legislation this would not need to be identified as an ‘other responsibility’. The overriding question to be addressed is whether a third party (e.g. a lay person, regulator, or potential purchaser of/ investor in your business), having read the relevant sections of an individual’s SoR, would have a good understanding of the responsibilities of that individual and exactly what that person is accountable for. Statements of Responsibilities set out what SMFs are responsible and accountable for, rather than how they carry out those responsibilities; need to be self-contained and not refer to other documents; should be succinct and clear without unnecessary detail; and are tailored to the role not the individual (that is, the contents apply equally should the incumbent move on and be replaced). These are not lengthy documents and are intended as a concise reference of who is responsible for what in a firm. Indeed the PRA and FCA would not usually expect the description of each responsibility to exceed 300 words. In writing down the SoRs, issues that firms may wish to consider are:- Does the SMF have the authority needed within the business to fulfil their responsibility?; Does a responsibility currently rest with a non-SMF in which case does the responsibility need to be re-assigned to a SMF or does the non-SMF need to be promoted to a SMF?; and Are responsibilities currently divided and is a material change in reporting lines needed to locate them in a single SMF? It should be evident from this that there is potential for there to be some challenging conversations in allocating responsibilities so you need to have clarity about the role and see whether you existing personnel have the capability and capacity to do it.

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6.1 The Duty of Responsibility Every Senior Manager will have a Duty of Responsibility under FSMA (Financial Services and Markets Act 2000). This means that if a firm breaches one of our requirements, the Senior Manager responsible for that area could be held accountable if they didn’t take reasonable steps to prevent or stop the breach. The burden of proof lies with the FCA to show that the Senior Manager didn’t take the steps a person in their position could reasonably be expected to take to avoid the firm’s breach occurring.

In respect of prescribed responsibilities, the handbook sets out in some detail the nature of the prescribed responsibility and the relevant SMR needs to ensure they are conversant with the content and can demonstrate they understand the content. The SMs will need to satisfy themselves that governance arrangements are sufficient to enable them to meet their obligations. Amongst other things, the firm’s documentation covering systems and controls, individual responsibilities, reporting lines and management information should be reviewed and subject to periodic updating and review.

The review should not be a passive activity and documentation should be maintained recording the judgements made in respect of the effectiveness of the governance arrangements. In addressing this our expectation is that there will be a proportionate approach having regard to the size of firm and the nature and extent of their activities. The SMR should review the adequacy of existing management information to determine whether or not it provides relevant and sufficient information for them to fulfil their obligations. SMs who are part of a group should remember that MI should be set at legal entity level. The SM should evidence their review and in particular document issues/actions arising and most importantly, their subsequent closure. The SMR should satisfy themselves they have received adequate training for their role to enable them to carry out their responsibilities and ensure that periodic training is undertaken.

This is one of the most difficult areas of the SM&CR. SMs want to know what are the ‘reasonable expectations’ being placed upon them. It is not possible to provide a definitive answer as to what constitutes ‘reasonable expectations’; it will vary from firm to firm and the circumstances of a particular issue. Nonetheless there are certain factors for all SMs to consider to demonstrate that are minimising the risk of a breach occurring. A non- exhaustive list is set out below:- The SMR (Senior Manager Responsible) is satisfied that the documentation maintained by the firm is very clear as to the exact nature of the SM’s responsibilities for both prescribed and other responsibilities. In particular, boundaries are clear and there are no overlaps or underlaps of responsibilities. The SMR will need to ensure that the documentation is version controlled and updated to where there are changes in responsibilities. The larger the organisation the greater will be the maintenance impact of this. In larger organisations you may need to think about a software solution to help manage and control this but smaller firms with low turnover of SM’s this will not be necessary. Does the documented job description properly reflect the SM’s responsibilities?

SMs should be aware that any engagement with the FCA may well require articulation of their responsibilities and how they fulfil their role.

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The obligation to prepare and maintain responsibilities map only applies to enhanced firms . Core firms, particularly larger core firms, may wish to consider whether maintaining a Responsibilities Map would be of assistance to them as a record as to how responsibilities have been allocated. For example, having clarity about who is responsible for what throughout the business will potentially be helpful in resolving issues quickly. FCA SYSC 4.5 sets out the existing rules governing Responsibilities Map the general rule is that enhanced firms must, at all times, have a comprehensive and up-to-date document that describes its management and governance arrangements , including: (1) details of the reporting lines and the lines of responsibility; and (2) reasonable details about: (a) the persons who are part of those arrangements; and (b) their responsibilities. 7.0 Responsibilities Maps

The responsibilities map is a single document that sets out the relevant firm’s management and governance arrangements and the manner in which these are allocated. It is intended to capture the collective view of the allocation of responsibilities across the firm. Feedback from the banking sector about the content of well-prepared responsibilities map is set out below:- Clear Governance Arrangements Embeds SoR in the map Lists certified functions or individuals Links to three lines of defence 1 Provides ‘one-glance’ view Documents version controls of map

Handover procedures and material Enhanced firms have to procedures and supporting material to ensure an effective handover of SM responsibilities’. Further information can be found at SYSC 25.9

1. the first line of defence – functions that own and manage risk the second line of defence – functions that oversee or specialise in risk management, compliance the third line of defence – functions that provide independent assurance, above all internal audit

Introduction The certification regime applies to both enhanced and core firms – the requirements are the same for both categories of firms. In our view, the FCA will NOT apply a proportionality test in terms of the application of the rules - the fitness and propriety obligations must be met to the same standard by all firms – large and small. Firms are required to have identified those staff who will have to be covered by the certification regime by 9th December 2019 but will have until 9th December 2020 to complete the initial certification process. The certification regime builds on the existing obligations in the FCA’s Handbook in respect of training and competence. Feedback received from consultants implementing SM&CR in the banking sector is that they found certain firms were not complying with the existing T&C rules which meant that the firm had to address this issue as part of their SM&CR implementation. Feedback from firms implementing the regime is that the certification regime takes up more resources than they originally anticipated. In particular, monitoring and setting deadlines and ensuring they are met in terms of individuals certification has been a major ongoing challenge. Firms will need to ensure that they have established robust systems and controls to address this challenge building upon the current system and controls established to address their T&C obligations. Appendix D provides template examples of certficates for Senior Managers and certified staff. 8.0  Certification Regime

Scope of the certification regime The table below extracted from the FCA’s Guide sets out the scope of the certification regime:-

Internal hire (including intra-group hires)

Annual assessment

New Hire

Senior Manager Regulatory reference F&P assessment FCA approval before commencing role Criminal record

3

7

7

3 3

3 3

3

7

3

3

7

Certification Function Regulatory reference

3

7

7

F&P assessment

3 3

3 3

3 3

Certification for function

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9.0  Criminal records checks for Senior Managers

Firms and candidates for SMFs need to declare if a candidate has a criminal record (to the maximum extent allowed by law) – in particular, under GDPR the employers have legal obligation to process sensitive personal >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32

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