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Advisers to come under tougher senior managers regime


The senior managers regime is to be extended to all regulated firms, the Treasury is due to announce.

Money Marketing understands the Treasury will announce today the regime will be extended to all firms, including financial advisers, mortgage brokers and consumer credit firms.

It is understood the regime will apply regardless of the size of the firm and will be introduced in 2018.

The FCA is introducing a new regulatory framework for individuals in the banking sector from March 2016. It means firms will be legally required to assess whether senior managers are fit and proper on at least an annual basis.

In June the Fair and Effective Markets Review, which was launched by Chancellor George Osborne and the Bank of England, recommended the regime be extended to at least asset managers. However, it said such a move would be subject to consultation.

King & Wood Mallesons partner Tamasin Little says: “The senior managers regime essentially shifts responsibility from the regulator to the firm for vetting and certifying most of the customer-facing staff – and extending direct regulatory responsibilities to a number of staff not previously requiring approval from the FCA.

“There will be a great deal more attention paid to the allocation of responsibilities and need to identify a responsible person for each area.

“The costs of any such change will inevitably end up being borne by the client. In theory, however, all firms should already be ensuring everyone is properly vetted and approved, and the governance of the firm is clear and appropriate.”

Also today, the Bank of England has confirmed the harshest requirements of the regime for banks has been softened.

The Bank of England has said that the government will drop requirements requiring executive to prove they had taken all reasonable steps to prevent conduct breaches.

Instead, the FCA will have to prove managers failed to do so.

In a statement, Prudential Regulatory Authority chief executive and Bank of England deputy governor of prudential regulation Andrew Bailey says: “Once introduced, it will be for the regulators (rather than the senior manager) to prove that reasonable steps to prevent regulatory breaches were not taken.”

“The focus for firms and individuals should be on complying with both the letter and the spirit of the rules rather than considering ways to circumvent them.”

FCA acting chief executive Tracey McDermott says: “Extending the senior managers’ and certification regime is an important step in embedding a culture of personal responsibility throughout the financial services industry.

“While the presumption of responsibility could have been helpful, it was never a panacea.

“There has been significant industry focus on this one, small element of the reforms, which risked distracting senior management within firms from implementing both the letter and spirit of the regime. The senior managers’ and certification regime is intended to deliver better decisions to help avoid problems arising. We remain committed to holding individuals to account where they fail to meet our standards.”



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. The gravy train continues

  2. I think they will find that most IFA firms (cannot speak for restricted, but probably similar for them) have this system in place already, albeit there is an element of self-approval in the smallest firms.

    It comes within most basic compliance remits and involves records such as KPI’s, CPD and in fact all of the stuff we already have to do as a part of being regulated (jeesh it makes me wonder what these ‘other’ firms are doing, or have I missed the point here?)!

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