In July 2018, the FCA published its long-awaited near final rules on the extension of the Accountability Regime to all financial services firms. The regime will apply to all FCA solo-regulated firms (including branches of EEA and non-EEA firms) from 9 December 2019 (PS18/14) and to insurers from 10 December 2018 (PS18/15).
The FCA has also published:
- Final Guidance (PS18/16) on the Duty of Responsibility under SMCR for insurers and FCA solo-regulated firms designed to help firms "understand what steps they need to take to prepare for the SMCR's implementation".
- Proposals (CP18/19) to introduce a new public register, the 'Directory', of key individuals working in the financial services industry. The proposed Directory will include information on all individuals who hold Senior Manager positions requiring FCA approval as well as staff falling under the Certification Regime.
- Proposals (CP19/4) on optimising the Accountability Regime such as providing clarity on the scope of the client dealing certification function and ensuring Senior Manager Conduct Rule 4 applies to non-approved executive directors at Limited Scope firms.
The Accountability Regime has applied to banks, building societies and dual-regulated (FCA and PRA) regulated firms from March 2016 (insurers were subject to a stream-lined version from that date). The FCA and Prudential Regulation Authority implemented the Accountability regime following calls by the Parliamentary Commission on Banking Standards for a new regime to improve clarity of responsibilities of senior banking personnel, ensure accountability over all aspects of the business and improve the competence and conduct of all levels of staff.
What is the Accountability Regime?
There are 3 components to the Accountability Regime:
- The senior managers regime - enhances the accountability and responsibilities of senior managers
- The certification regime - puts the responsibility on the firm to 'certify' that individuals (who are not senior managers but whose jobs mean they can have a significant impact on customers, the firm or market integrity) are 'fit and proper'
- Conduct rules - a set of enforceable behavioral standards to apply to senior individuals and employees
The Accountability Regime will be applied in a proportionate manner:
- The larger and more complex firms (Enhanced Firms) will have to comply with a regime akin to those applicable to banks and the larger investment firms.
- Whereas, smaller firms (Limited Scope Firms) will be subject to a reduced set of requirements.
- The remaining firms (the bulk of FCA solo-regulated firms - the Core Firms - will comply with the baseline requirements.
See Application section for further detail about the Accountability Regime