The Certification Regime applies to specific functions that are not SMF but can have a significant impact on customers, the firm or market integrity. These individuals do not have to be approved like SMF, but firms will need to confirm (certify) they are suitably qualified to carry out their role annually. The FCA have defined a list of Certified Functions which will apply to a much larger group of people than the previous APER regime.
A Senior Manager is personally responsible for this obligation as part of their prescribed responsibilities.
The conduct rules under SM&CR are principles designed to ensure a high standard of behaviour for all staff, and extend to all individuals in the regulated company, except for ancillary roles, for example, receptionists, cleaners, HR administrators.
There are two tiers of Conduct Rules.
First tier rules apply to all staff, while tier 2 applies to Senior Managers such as heads of departments and directors only.
It is the responsibility of firms to ensure that their employees fully understand the Conduct Rules and receive specific training on how they comply with them. Any breaches of the Conduct Rules must be formally notified to FCA.
The FCA Principles for Businesses underpin the rules that apply to all regulated firms, regardless of their business area.
First tier rules – Individual Conduct Rules
- You must act with integrity
- You must act with due care, skill and diligence
- You must be open and cooperative with the FCA, the Prudential Regulation Authority (PRA) and other regulators
- You must pay due regards to the interests of customers and treat them fairly
- You must observe proper standards of market conduct
Second tier rules – Senior Manager Conduct Rules
SC1. You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively.
SC2. You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system.
SC3. You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively.
SC4. You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice.
A Senior Manager is personally responsible for these obligations as part of their prescribed responsibilities