The UK Financial Conduct Authority has proposed to exclude the head of legal function from the requirement to be approved as a senior manager under the Senior Managers Regime. It has also made further proposals in its consultation paper to optimise the Senior Management and Certification Regime, including by amending the intermediary revenue criterion for enhanced-tier firms, amending and clarifying the application of the Certification Regime, and extending the application of Senior Manager Conduct Rule 4.
The Financial Conduct Authority (FCA) has published a consultation paper dated 23 January 2019 in which it proposes, among other things, to exclude the head of legal function from the requirement to be approved as a senior manager under the Senior Managers Regime (SMR). The consultation closes on 23 April 2019.
The FCA’s consultation paper has been issued further to its September 2016 discussion paper, which examined the issue of balancing the legal function’s independence and ability to offer legally privileged and impartial advice with the principles of accountability under the SMR. The consultation paper provides feedback and details the FCA’s proposal to exclude the head of legal function from the requirement to secure senior manager approval. Reasons for this proposal include the following:
In making this proposal, the FCA makes it clear that it is not proposing to exclude lawyers from performing other senior management functions, such as the roles of chief operations officer or head of compliance. In those instances, the SMR and all obligations thereunder would still apply to that individual to the same extent.
The FCA’s consultation paper also sets out its proposal to
Finally, the consultation paper details the FCA’s proposal to extend the application of SC4, which requires those subject to it to disclose appropriately any information of which the FCA or Prudential Regulation Authority would reasonably expect notice. SC4 currently applies to senior managers and all nonexecutive directors, and will be extended to include nonapproved executive directors of UK limited-scope firms. This would ensure that all directors of these firms are subject to equivalent requirements.
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