Mark Turner
Managing Director
Compliance and Regulatory Consulting
London
Mark TurnerAbout SM&CR
SM&CR is designed to strengthen individual accountability and market integrity and is the most significant change for individuals working within the UK financial services industry. Its implementation comes after widespread criticism of the outgoing Approved Persons Regime (APER) during the wake of the financial crisis.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) implemented the regulation for banks, building societies and PRA-designated investment firms in March 2016, and plan to apply it to FCA solo-regulated firms in mid-to-late 2019. A parallel regime was introduced for insurers in March 2016, which incorporates many elements of SM&CR. Insurers will transition from this regime to SM&CR starting 10 December 2018.
A tiered approach will be taken to implement SM&CR to FCA solo-regulated firms:
The new regulation has three components:
Key challenges
We recognize that the regime introduces a number of new procedures, including changes to regulatory approval processes, the requirement for self-certification and changes to HR and compliance processes more broadly. However, this regime is focused on individuals, and firms must ensure they pay due regard to the impact of the regime on individual employees and directors, alongside the required process change.
Based on our significant experience supporting firms in the banking and insurance sectors, as well as helping firms plan for 2019, we identified several challenges which should be considered in anticipation of SM&CR implementation. Addressing these challenges from the outset (some of which may be complex to resolve), will reduce the risk of having to re-visit and re-perform activities later in implementation, and importantly, will deliver the support to individuals impacted by the regime. These challenges include:
How Duff & Phelps can help
We have significant experience supporting all aspects of SM&CR across diverse financial services firms. Our services include:
Local and global compliance expertise for the financial services industry.
Compliance and Regulatory ConsultingRegionally targeted assistance for asset managers in compliance program development, implementation and maintenance
By JurisdictionComprehensive compliance and regulatory support for FCA authorized firms.
UK RegulationExpert compliance support for a variety of firms including hedge funds, private equity firms, wealth managers, corporate finance and broker dealers.
Compliance ConsultingGuidance on sufficient regulatory capital for EU funds.
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