3. Senior Manager and Certification Regime

Question 1

What is another name for the Senior Manager and Certification Regime (SM&CR)?

Answer 1

Individual Accountability Regime

Question 2

Who is included within Senior Management Functions?

Answer 2

1. SMF include all directors regardless of non-exec or exec or type.
2. Any heads of functions (chiefs etc.)
3. Money Laundering Reporting Officers (MLRO)

Question 3

Who is included within Certification Functions?

Answer 3

1. Significant Harm Functions (anyone who can harm firm conduct risk, market integrity, or clients)

Question 4

What is a common feature between Senior Management Functions and Certification Functions?

Answer 4

They both are subject the Fitness and Propriety assessment.

Question 5

What is a distinction between Senior Management Functions and Certification Functions?

Answer 5

Senior Management Functions require pre-approval from the regulator while Certification Functions are issued certificates directly by the firm.

Question 6

What is the third category of the SM&CR?

Answer 6

Other Conduct Rules Staff which captures most of the remaining staff at a financial firm.

Question 7

Which rules must three categories of SM&CR follow?

Answer 7

Must comply with Conduct Rules (COCON) otherwise disciplinary action will be carried out by the regulator.

Question 8

Who is not subject to COCON rules or Fitness and Propriety Test?

Answer 8

Ancillary staff (cleaner, security guard etc)

Question 9

How often must the Fitness and Propriety Test be carried out?

Answer 9

Verification should be sent every year to the regulator.

Question 10

What three main things does the SM&CR outline with regards to the responsibilities of a Senior Manager Function?

Answer 10

1. Prescribed Responsibility
2. Responsibilities map
3. Duty of Responsibility

Question 11

What are the three main features of Prescribed Responsibility?

Answer 11

1. Implementation and oversight of SM&CR
2. Implementation and oversight of training and notifications for Conduct Rules
3. Countering risk of financial crimes

Question 12

What is the responsibilities map?

Answer 12

Enhance transparency on individual and accountability and reporting lines.

Question 13

What duty of responsibility do senior managers have and what can be the consequence if they fail to do so?

Answer 13

1. Ability to prove that they took reasonable steps to fulfil any prescribed responsibilities and prevent, stop and remedy any breaches.
2. Potential Disciplinary Action can be taken by the regulator

Question 14

How does the firm assess fitness and propriety of Certification Functions?

Answer 14

On appointments and annually.

Question 15

How do firms apply for approval on behalf of senior managers?

Answer 15

Submit Form A on behalf of senior managers to the regulator - Firms will be informed within 90 days.

Question 16

What does the Fit and Proper Test (FIT) entail?

Answer 16

1. Honesty, Integrity and Reputation

• Breaches of FCA/PRA rules
• Complaints
• 6 years of employment history
• Criminal convictions (no time limit)

2. Competence and Capability

• Exam success
  -Experience and training

3. Financial Soundness

-bankruptcies

Question 17

What does the certification regime entail?

Answer 17

Requires firms to assess, both at recruitment and on annual basis, the fitness and propriety of employees who could pose significant harm to the firm, market integrity or customers.

Question 18

What happens if the regulator has insufficient information when conducting the FIT test?

Answer 18

They ask for further clarification and can halt the process for 90 days while waiting.

Question 19

How many Conduct rules (COCON) are there?

Answer 19

10 but 4 only apply to senior manager function roles.

Question 20

Name the 6 that apply to individuals.

Answer 20

1. Integrity
2. Skill, Care, Diligence
3. Open and co-operative with FCA, PRA and other regulators
4. Treat customers fairly and pay due regard
5. Comply with Code of Market Conduct
6. Deliver good outcomes for retail customers

Question 21

Name 4 that only apply to SMF functions.

Answer 21

1. Business of the firm that you are responsible for is controlled effectively.
2. Take relevant steps to ensure the business complies with regulatory requirements
3. Oversee delegation of responsibilities
4. Disclose any information PRA or FCA expect