UK: SMCR: Extension To All FCA Firms – Near-Final Rules And Further Consultation On New Public Register

On 4 July 2018, the FCA published the following package of documents relating to the extension of the Senior Managers and Certification Regime (SMCR) to insurers and all FCA firms:

  • PS 18/14 on Extending the SMCR to FCA Firms, containing feedback on the FCA's original proposals in CP 17/25 and CP 17/40, and including near-final rules (some of which build on those set out in PS 18/15);
  • PS 18/15 on Extending the SMCR to Insurers, which addresses the extension of the SMCR to insurers and includes near-final rules which will come into force on 10 December 2018 (subject to certain transitional arrangements or earlier entry into force of technical provisions). We do not discuss the provisions that are specific to insurers in any further detail in this briefing;
  • PS 18/16 on Final Guidance: the Duty of Responsibility for Insurers and FCA Solo-Regulated Firms, containing feedback on the FCA's original proposals in CP 17/42; and
  •   CP 18/19 on Introducing the Directory, containing proposals for a new public register for senior managers, certified staff and certain other individuals. This consultation will close on 5 October 2018.
  • We summarised the FCA's original proposals for the extension of the SMCR in our earlier client briefings published in July 2017 and December 2017.
  • In this client briefing we provide a brief overview of the final positions reached by the FCA and highlight any material changes from the original suggested rules. The final proposals have not changed significantly from the original consultations.


  • Commencement date: HM Treasury has now confirmed that the SMCR will be extended to solo-regulated firms on 9 December 2019, although this remains subject to the necessary secondary legislation being enacted. This means that firms will have approximately 17 months to prepare for implementation. Until that date, firms will need to continue to comply with the existing approved persons regime (APR).
  • Grandfathering of existing approved persons: The FCA has confirmed that it will be using the transitional arrangements that it had originally proposed. In practice, this means that current holders of controlled functions under the APR within Core Firms and Limited Scope Firms will automatically convert to senior management functions (SMFs) in accordance with a correlation table published by the FCA. The exception is in relation to non-executive chairs, where the firm will need to notify the FCA that the relevant individual needs to be approved for the SMF chair function by submitting a Form K. Approvals granted in relation to controlled functions under the APR that no longer exist under the SMCR will lapse. Enhanced Firms will need to submit a new Form K to specify how their existing controlled functions should be converted into SMFs.
  • Transitional arrangements: Firms will have 12 months from the commencement of the SMCR (i.e. until 9 December 2020) to complete their fitness and propriety assessments, certification of certified staff and staff training on the new conduct rules.
  • General approach: The FCA is largely proceeding on the basis of the proposals that it originally put forward in the initial consultation papers, although there have been some relatively minor amendments and clarifications in places.
  • Firm classification criteria: Firms will still need to classify themselves as either Limited Scope Firms, Core Firms or Enhanced Firms, but the criteria for classification as an Enhanced Firm have been modified slightly, essentially to bring in a 3-year average calculation for the purposes of certain thresholds. This is designed to reduce the risk of firms exceeding a relevant threshold due to a temporary spike in the relevant metric.
  • Senior management functions: For Core Firms, the FCA is retaining the SMFs that it originally proposed. This means that to the extent that a Core Firm has them, the chief executive, directors, partners, chair, money laundering reporting officer and compliance officer will need approval from the FCA as a senior manager (SMF manager). Notably, this means that the current CF30 (customer) function will lapse, although individuals who perform that role are likely to be classified as certified staff (see below). Additional SMFs will apply to Enhanced Firms, as originally proposed by the FCA, while Limited Scope Firms will be subject to a lighter regime. Each SMF manager will be required to have a statement of responsibility.
  • Prescribed responsibilities: The FCA has retained five of the six original proposed prescribed responsibilities for Core Firms, which must each be allocated to an SMF manager. After feedback, it has withdrawn the proposed prescribed responsibility relating to informing the governing body of its legal and regulatory obligations. However, it has also added a new prescribed responsibility on which it had consulted separately following the Asset Management Market Study, which will only be relevant to
  • managers of authorised funds. This relates to responsibility for the manager's value for money assessments, independent director representation and acting in investors' best interests. Additional prescribed responsibilities will apply to Enhanced Firms, whereas Limited Scope Firms are not required to allocate any prescribed responsibilities.
  • Certification regime: The FCA is applying the certification regime as originally consulted upon, including as regards the territorial scope of the relevant rules. This means that individuals performing services for the firm from outside the UK may be subject to the certification regime if they are classified as material risk takers or are dealing with UK clients. Firms will have 12 months from the commencement date of the extended SMCR to ensure that all relevant staff have been certified as fit and proper.
  • Fitness and propriety assessments: The FCA has confirmed that SMF managers, other directors who are not SMF managers and certified staff must be assessed as fit and proper on an annual basis. Criminal records checks will only be required where the firm is applying for a person to perform an SMF and will not be required again as part of the annual fitness and propriety assessment.
  • Regulatory references: As the FCA originally proposed, firms will be required to obtain regulatory references from a person's employers for the previous 6 years where that person is being appointed as an SMF manager, a non-SMF director of the firm or a member of certified staff. The FCA has confirmed that where an individual moves to perform another function within the firm's group that requires regulatory references, the new group entity appointing that individual may be able to rely on references previously received if they are drafted in such a way that it is clear that the person providing the reference would permit such reliance.
  • Conduct rules: The FCA has adopted the Conduct Rules (COCON) as originally proposed, meaning that SMF managers will be subject to the full set of rules and other relevant staff will be subject to a more limited set of requirements. These rules will apply to all staff within the firm in relation to its regulated activities and a range of other connected activities or activities that may have an impact on the firm, except where the relevant staff are only performing a role on an exhaustive list of ancillary activities. Firms will be required to notify the FCA where they have taken action against an individual for breach of the COCON rules.
  • Additional requirements for Enhanced Firms: As originally proposed, Enhanced Firms will be subject to additional requirements relating to the preparation of a firm-wide responsibility map and the use of handover procedures to provide for a smooth transition between incoming and outgoing SMF managers.
  • Application to UK branches: Incoming UK branches of EEA and non-EEA firms will be subject to a limited application of the SMCR. For EEA firms, this will include a limited set of SMF manager requirements, as well as compliance with the certification requirements and conduct rules for individuals based in the UK. For non-EEA firms, this will include a somewhat wider set of SMF manager requirements, a limited range of prescribed responsibilities and compliance with the certification requirements and conduct rules for UK-based individuals.
  • Proposed new "Directory": In CP 18/19, the FCA has put forward new proposals to introduce a public "Directory"; a single interface that would include details of all SMF managers who appear in the Financial Services Register, together with certified staff and non-SMF directors. As the FCA will not have the necessary details for certified staff or non-SMF directors, firms will be required to supply additional information through the FCA's Connect system to compile the Directory. In addition, they will be under an ongoing obligation to keep the relevant information up-to-date.

We will be preparing a fuller guide for clients, setting out a summary of the final rules and proposals. If you would like to receive this, please liaise with your usual Travers Smith contact.


  • The FCA has confirmed that for solo-regulated firms, the SMCR will apply from 9 December 2019
  • Grandfathering arrangements will apply to existing approved persons, subject to prior notification by firms in certain cases
  • Transitional arrangements will apply to fitness and propriety assessments, certification of certified staff and staff training on the new conduct rules, all of which must be completed for the first time by 9 December 2020
  • The near-final rules are broadly the same as contained in the FCA's original consultations, although certain amendments and clarifications have been made in some areas
  • The FCA is also consulting on introducing a new public register ("the Directory") which will contain information about a range of individuals within firms subject to the SMCR, including those who will no longer require FCA approval to perform their roles (e.g. certified staff)
  • The proposals for the new Directory would require firms to report additional information to the FCA on a regular basis
  • The consultation on the Directory is open until 5 October 2018

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions