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Compliance date for the SM&CR

Background

  • On 1st April 2019, the FCA assume responsibility for the regulation of Claims Management Companies, CMCs established in the UK.
  • As with all solo-regulated firms in the UK, CMCs are obliged to comply with SM&CR from 9th December 2019.
  • SM&CR brings forward an enhanced level of responsibility, accountability and liability for the Senior Manager and is set to enhance governance and conduct standards of financial services in general.
  • CMCs will thus need to commence their preparations now to ensure compliance with the regime by 9th December 2019.
  • Policy Statement 19/9 sets out the SM&CR rules for how the regime specifically applies to CMCs which were derived from earlier consultation papers, CP18/15 and CP18/26, published in September 2018.

Impact

The SM&CR regime will apply to CMCs through the application of the following:

  • The Senior Managers Regime, SMR will apply to at least 1 person within each CMC.
  • This person requires FCA approval to perform a Senior Management Function (SMF).
  • The Senior Manager has responsibility for systems and controls within the firm and a Duty of Responsibility.
  • In the event of a breach occurrence or control failure, the FCA will assess whether the Senior Manager took reasonable steps to prevent the breach occurrence and took effective and prompt action to rectify the issue.
  • The firm must assess the fitness and probity of specific individuals that could cause harm to customers under the requirements of the Certification Regime.
  • New conduct rules under SM&CR will apply to all employees.
  • CMCs must complete the Directory, a new public register and user interface which will include the Certification staff and other individuals such as Directors.
  • The objective of the new regime is to bring forward an improved culture within CMCs which is more focused on customer outcomes.
  • In preparation for compliance on 9th December 2019, CMCs will need to apply for individuals to be authorised to perform SMFs as soon as the relevant forms become available, likely to be 9th September 2019 to allow for authorisation and lead in time ahead of the 9th December deadline.
  • Firms are encouraged to submit their authorisation requests before 1st November 2019. 

Timeline

  • 29th March 2019 – FCA publish Policy Statement PS19/4 outlining how SM&CR applies to CMCs
  • 1st April 2019 – FCA assume responsibility for the regulation of CMCs
  • 9th September 2019 – SMF authorisation forms to be available on FCA website
  • 1st November 2019 – FCA deadline by which to seek SMF authorisation
  • 9th December 2019 – compliance date for the SM&CR