Janice Laing: Preparing for the SM&CR deadline

When Covid-19 hit the UK in earnest, the regulator, like the rest of us, had to take a step back and revaluate its priorities for the year. In January, the FCA had given us a pretty clear indication of where its focus would fall with its ‘Dear CEO' letter, outlining six key areas of interest. 

However, by the end of March, we found ourselves in a very different place, and some of the regulator's projects were moved to the backburner while it worked on producing policy specific to the repercussions of the pandemic 

For example, two months ago, the FCA issued an announcement entitled Extension of the Senior Managers & Certification Regime (SM&CR) implementation periods for solo-regulated firms, which proposed that the existing deadline by which firms must have completed their first assessment of the fitness and propriety of their Certified Persons be moved from 9 December 2020 to 31 March 2021. 

The FCA stated this extension to the deadline was intended to give firms significantly affected by the coronavirus pandemic the time to make the changes they need.

I recognise the flexibility demonstrated by the regulator in issuing this news and applaud its sympathetic stance towards those who have suffered as a result of the recent pandemic. However, I firmly believe the FCA will still expect the majority of firms to work towards the 9 December deadline and would encourage firms, if possible, to aim to have assessments completed and Certified Persons on the Directory on that date. 

While the regulator has not yet provided, and still may not provide, a definition of how a firm might have been ‘significantly affected' by Covid-19, I would suggest that you thoroughly consider whether the impact on your firm could be categorised as 'significant' before revising your SM&CR timeline. If you are able to have all of your Certified Persons shown on the Directory on 9 December, I'd suggest that you do so for both commercial and regulatory reasons, as well as having the peace of mind that your requirements in this area have been met. 

I'm mindful that, at present, firms working in Scotland are facing a longer period of non-face-to-face contact than those in other parts of the UK, which presents additional complications when it comes to evaluating and assessing staff, but I'd encourage you to look outside the box to come up with alternative solutions. Virtual conversations and working digitally are now very much part of the ‘new normal' and employing them in your processes could help you be ready to meet the December deadline.

It is clear to see that the FCA is making slow but steady progress back towards its areas of focus with guidance on contingent charging and vulnerable persons issued in the past month alone. 

We will discuss the above areas, and more, and also look at practical ways for technology to help you during the Working Lunch. I look forward to seeing you there.

Janice Laing is managing director at Compliance First

Laing will be speaking at a Professional Adviser Working Lunch focusing on regulation and technology on Thursday 27 August for Scottish advice firms. You can register for the event here

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