The challenge
The Senior Managers & Certification Regime (SM&CR) came into force for credit sector firms on December 9 2019. At the time, the FCA did not require affected firms to reapply in order for their Approved Persons under the outgoing Approved Persons Regime (APR) to transition to becoming Senior Managers under SM&CR, instead these individuals were grandfathered over.
While this certainly helped smooth the changeover from one set of rules to the next, it also created the potential for important considerations to get lost in translation. It has since become apparent that a number of affected firms had removed or reassigned individuals from Approved Persons roles and lost track of the need to allocate their responsibilities to another senior manager under SM&CR.
One such firm recently approached Thistle Initiatives for help. It had been contacted by the FCA, who had noted the firm’s failure to reallocate the relevant APR/SM&CR responsibilities. This had happened because an individual in an Approved Persons role had resigned around the time of the transition from APR to SM&CR, and the firm had not recognised the need to appoint another senior manager immediately in their place.
The client firm sold high-end watches. It offered credit and insurance to its customers as an ancillary service to its main business. After being contacted by the regulator, the firm reached out to Thistle Initiatives’ expert Credit team to help it bring its compliance arrangements back fully in line with the FCA’s SM&CR requirements.
The solution
The first and most urgent task we faced on appointment, was addressing the need to allocate Senior Manager responsibilities to an appropriate individual. Having identified the most suitable person within the organisation, we made sure they were fully aware of, and capable of discharging, the Senior Management Function (SMF) being assigned to them.
We also helped pull all the relevant materials together to complete their application for FCA authorisation, including an appropriate Statement of Responsibilities.
As part of that process, we made sure the selected individual was fully aware of, and informed about, all the relevant issues. We assigned them a learning and development plan and set them up on our online compliance training portal, Knowledge Centre.
Following on from this, the project extended into us assisting more broadly with the client’s compliance arrangements. In particular, we looked at other individuals involved in aspects of the firm’s activities that could pose a risk of ‘significant harm’ as defined by the Certification Regime. Having identified those in Certification Functions roles, we again assessed their fitness and propriety and brought them fully up to speed.
This developed into a still broader involvement for Thistle Initiatives, ensuring that the client’s ongoing compliance monitoring framework was fully robust and fit for purpose. As part of this, we carried out initial interviews with all relevant members of staff and ensured responsibilities were clearly defined and understood at all levels of the business. This eliminated any scope for compliance issues to fall between the cracks or get lost in isolated silos.
The upshot of all this work was the creation of a clear, concise compliance framework that enabled the client to establish a firm grip on all aspects of FCA compliance - and maintain this going forward. We backed this up by creating detailed, practical and tailored policies and procedures for the business across areas including (but not limited to): complaints, financial promotions, financial crime and vulnerable customers.
Meanwhile, a company-wide rollout of our Knowledge Centre online learning resource has helped ensure that all the client’s staff remain fully up to speed with the knowledge and understanding required of them under SM&CR. Knowledge Centre also documents all training undertaken, providing evidence of having met the FCA’s Code of Conduct training requirements.
The result
The client was delighted with how the whole project progressed and with the tangible benefits accruing from Thistle Initiatives’ involvement. The firm’s senior management now has the peace of mind that comes with having a robust, joined-up and practical compliance framework in place - one that will stand it in good regulatory stead for the future. We have also been retained to undertake ongoing auditing and consulting work, ensuring compliance obligations won’t slip through the net again.
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Contact us on 0207 436 0630 or email info@thistleinitiatives.co.uk.