Sept 17 – Half the answers

Parliament amended FSMA in May 2016 to extend the Senior Managers and Certification Regime to all authorised firms. This emanated from the work previously done by the Parliamentary Commission on Banking Standards, which reported in June 2013, leading to a series of consultations by the PRA and FCA in 2014 and 2015 to capture banks and deposit taking institutions. This resulted in an implementation date for Strengthening Accountability in Banking of 7 March 2016.

Having had the learning of all this initial work one might have thought that extending this out to less systemically risky firms would be easy. However it has taken from May 2016 to July 2017 for the first set of plans to be published. Unfortunately these lack clarity on three specific items.

Firstly we do not have a date to work to for implementation, although a “loose” date of the end of 2018 is in the ether. However we are unlikely to have final rules until the end of quarter one 2018.
Secondly, the legislation only captures employees of regulated firms. This means that the current proposals are silent on the impact on networks and their structures, with further consultations to follow.

Thirdly, as the Certification regime moves responsibility for approving advisers from the FCA to the firm principal, the future of the content of the FCA Register is unclear. There will be a subsequent consultation on this too.

That we have to respond to the questions set without a complete picture is always a risk for firms and their representatives. However the potential loss of investment advisers from the register and the final departure of any hope that mortgage advisers might be added cannot be a regulatory triumph. Surely a central trusted source where consumers can see who is permitted to advise should be a core part of any robust consumer protection regime.

Finally this is a 75 page consultation with 312 pages of draft rules. There is much in the detail not covered in the questions or summary consultation. Firms will need to ensure they fully understand the deeper detail in the final rules when they arrive.

Robert Sinclair
Chief Executive, AMI
September 2017