Historic moves….


By the time you read this item we will all know the results of two votes in Scotland, the first being the vote for Scottish independence and the second (long overdue, in my mind), whether or not the R&A Golf Club will admit women for the first time.  The independence results will have a profound impact on almost all of us, including our colleagues working in institutional asset and investment management as well as banking.  Whilst I expect the ramifications to be discussed at length going forward we have to focus attention elsewhere for this article.

The new regime will cover UK Banks (including private banks), Building Societies, Credit Unions and PRA designated Investment Firms

Issued at the end of July FCA CP14/13 and PRA CP 14/14 may have passed us by as the 360 odd pages might be too much to contemplate with everything else going on, but we should not overlook the fundamental future changes proposed under Strengthening accountability in banking: a new regulatory framework for individuals.  Responses are required by 31st October.

The new regime will cover UK Banks (including private banks), Building Societies, Credit Unions and PRA designated Investment Firms (those firms who deal as principal, which of course will encompass  investment banking, broadly speaking).

The CP, issued jointly by the FCA and PRA amplifies the Chancellors speech at the Mansion House this year and can be broken down in four areas:

  • Senior Managers Regime
  • Certification Regime
  • New Conduct Rules
  • FIT requirements

Anyone who believes they are affected will need to understand the relevant sections as captured here are only the key implications under each heading;

Senior Managers Regime

SIFs will be replaced with Senior Management Functions (SMF), with a number of roles being a requirement.  Lists of responsibilities for roles will be prescribed and individuals’ approval will have to be accompanied by a Statement of Responsibility.

Certification Regime

This covers all employees performing a role, which is not a SMF but could cause “significant harm” to the firm or its customers and will include certain risk takers, FCA customer functions covered by qualifications, those who manage people covered by certification and current SIFs not mentioned in the SMF list i.e. benchmark submitters and CASS oversight.  So rather than individual registration with the regulator(s) firms need to certify employees as fit and proper on an annual basis.

New Conduct Rules

Existing Statements of Principle and Code of Practice for APER will be replaced by a new set of conduct rules with 4 rules (5 for FCA individuals) and a further 4 for SMFs with all staff requiring training and to be given specific examples pertinent to the areas they work in.

FIT Regime

Whilst broadly unchanged firms will have to advise of SMFs failing the FIT assessment and those covered by certification must not have their certificate renewed.  The PRA will be adding additional rules as currently they are no existing rules to cover FIT or T&C.

Needless to say, there is extensive detail under each area and we would urge you to take a look at this, if you can be drawn away from the Scottish issues, as soon as possible.


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Julia Kirkland, Head of FSTP Limited FSTP is now part of ZISHI and OSTC Group

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