SM&CR reporting deadline approaches for solo-regulated firms

Following an extension by the FCA in September 2020, we are fast approaching 31st March 2021, the deadline for solo-regulated firms to have completed and reported to the FCA their first assessment of Certified Persons. Member firms should have already identified if they have employees performing certified functions under the Senior Managers and Certification Regime (SM&CR). More information on certified functions can be found here.

How do I comply?

  1. Firms must complete a fitness and propriety assessment of Certified Persons within their organisation including:

a) Honesty, integrity and reputation
Should include, but not be limited to:

  • Whether the person has criminal convictions, including spent convictions with particular consideration given to offences of dishonesty, fraud, financial crime or offences under legislation relating to companies, banking, consumer protection, money laundering, market manipulation and insider dealing, whether or not in the UK.
  • Whether the person has been subject of any adverse finding or settlement in civil proceedings, particularly in relation to investment or other financial business, misconduct, fraud or formation of a body corporate.
  • Whether the person has been the subject of existing or previous investigations or disciplinary proceedings by a regulator, professional bodies, government bodies or agencies.
  • Whether the person has been subject to any proceedings of a of a disciplinary or criminal nature, or has been notified of any potential proceedings or of any investigation which might lead to those proceedings.
  • Whether the person has contravened any of the requirements and standards of the regulatory system or the equivalent standards or requirements of other regulatory authorities.
  • Whether the person has been the subject of any justified complaint relating to regulated activities.
  • Whether the person has been involved with a company, partnership or other organisation that has been refused registration, authorisation, membership or a licence to carry out a trade, business or profession, or has had that registration, authorisation, membership or licence revoked, withdrawn or terminated, or has been expelled by a regulatory or government body.

b) Competence
Should include, but not be limited to:

  • Whether the person satisfies any applicable training and competence requirements (in relation to the function that the person performs or is intended to perform).
  • Whether the person has demonstrated by experience and training that they are suitable to perform the function they are intended to perform.
  • Whether the person has adequate time to perform the function in question and meet the responsibilities associated with that function.

c) Financial soundness
Should include, but not be limited to:

  • Whether the person has been the subject of any judgment debt or award, in the United Kingdom or elsewhere, that remains outstanding or was not satisfied within a reasonable period.
  • Whether, in the United Kingdom or elsewhere, the person has made any arrangements with their creditors, filed for bankruptcy, had a bankruptcy petition served on them, been adjudged bankrupt, been the subject of a bankruptcy restrictions order (including an interim bankruptcy restrictions order), offered a bankruptcy restrictions.
  • Undertaking, had assets sequestrated, or been involved in proceedings relating to any of these.

2. Once your assessment has been completed and you are satisfied with the results, a certificate should be issued to the individual confirming the employee is deemed competent to perform their role. This should confirm that the firm is satisfied that the person is a fit and proper person to perform the certification function they perform and set out the aspects of the business in which the individual is involved.

3. The information relevant to the individual should then be submitted to the FCA before the deadline of 31st March 2021.
The information required to be confirmed to the FCA via CONNECT is as follows:

  • Certified Person’s (Directory Person’s) full name.
  • Individual reference number (IRN) where the Directory Person has one (Unlikely to be the case for those registering for the first time).
  • Relevant role(s) held within your firm.
  • Start and/or end dates of each role (This should be the date the individual was first certified by the firm, but should be no earlier than the start date that the regime came into force 9th December 2019).
  • Type of business the Directory Person is qualified to undertake (if requiring qualification).
  • Workplace location(s) – postcode(s) for customer facing roles only.
  • Unique identifiers – passport number, national insurance number and date of birth.

Once you have collated all such information for your Certified Persons, firms should login to the FCA’s Connect portal and complete a Directory Person’s application. Once logged in, you should:

  • Start New Application
  • Select Directory Persons (or Add Directory Persons) application
  • Select Attestations and confirm the required information (as detailed above)
  • Complete the declaration as to the accuracy of the data submitted

How is the NACFB helping me meet these obligations?
The NACFB has created a template certificate for member firms to issue for their Certified Persons. This template can be downloaded from the NACFB website, once logged in, via the compliance pages, by searching for Certificate of Fitness Propriety within our suite of templates.

Further information
The FCA has produced useful FAQ guidance for firms, answering common questions relating to the Directory Persons.
More detailed information on fit and proper assessments and FCA expectations can be found here.

Should any NACFB Members have further questions, please contact the compliance team who will be happy to help.

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