On the 4th July the FCA released Policy Statement 18/14. This outlines the near-final rules for extending the Senior Managers (SM) & Certification Regime (CR) across FCA regulated firms.

Policy Statement 18/14 also provides the regulators feedback on both consultation papers 17/25 & 17/40. This is understandably an important document for all affected firms to get to grips with.

Approximately 47,000 will need to be ready to move from the Approved Persons Regime (APER) to the new Senior Managers Regime (SMR) and Certification Regime (CR) in December 2019. Implemented together, you'll hear references to SMCR or SM&CR.

What is the impact on Asset and Investment Managers?

SMR is a detailed introduction of individual accountability for those at the very top of our organisations. It means senior staff will need to take specific and prescribed responsibilities for activities in their firms and, if anything goes wrong, they will be held to account. In some instances very senior Marketing staff who may be on Boards and ExCos, will have to assume some of these responsibilities which have never been as explicit as they will be going forward.

The CR may have a bigger impact on our marketing functions. Going forward those who have a role that involves exposing the firm to risk of potential customer or wider firm detriment will need to be internally certified as 'Fit and Proper'. A firm may decide that those responsible for producing financial promotions or designing new products or services should be certificated. This means those individuals would have to be certified each year to show that they are fit and proper (honest, financially sound, competent and capable).

Most firms, namely the banks who moved to the regime in 2016, have made it compulsory for certified individuals to complete a set amount of CPD per annum and have to undergo financial and police record checks (either randomly or annually depending upon the firms risk appetite), under a performance appraisal, in some instances insisting that staff take examinations as a benchmark of competence (this is now linked to a requirement of MiFID II whereby those who impart market or firms information about products or services are designated as "information givers" and also need to demonstrate competence annually. This is often people in marketing or sales who may provide generic presentations to either retail or professional investors). Those who are certified will need to have role specific conduct rules training.

Additionally as part of the new regimes, ALL staff need to undertake conduct rules training (Certified individuals will need to do both this and specific conduct rules training as highlighted above).

Both Financial Promotions and Product Governance are under the spotlight at the moment post MiFID II and is only one example of how the Marketing functions need to be aware of the part they play. Your Senior Managers will need to be assured that what you do and produce is properly monitored and is not a risk to the business or your end clients.

Your firms will be deciding who within the Marketing and Sales areas will be certified persons and what checks they will carry out to make sure they are fit and proper. All of your distributors will also be moving to the new regime and, as compulsory CPD becomes important for wider population providers, are looking at the presentations that they provide to distributors and thinking about how distributors can evidence this as credible CPD for their own records.