CP26/37: Senior Managers and Certification Regime (SM&CR) Review: Phase 2 — FCA — GB

Consultation Paper
CP26/37*
Senior Managers & Certification
Regime Review: Phase 2
October 2026

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Contents
Chapter 1 Summary Page 3
Chapter 2 The wider context Page 8
Chapter 3 Senior Managers Regime Page 11
Chapter 4 Certification and the Directory Page 27
Chapter 5 Conduct Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 33
Chapter 6 Implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 39
Chapter 7 How to respond Page 40
Annex 1 Questions in this paper Page 41
Annex 2 Cost benefit analysis Page 43
Annex 3 Analytical tables Page 60
Annex 4 Compatibility statement Page 67
Annex 5 Abbreviations used in this paper Page 72
Appendix 1 Draft Handbook text
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Chapter 1
Summary
1.1 We are consulting on a package of reforms to streamline and improve the Senior
Managers & Certification Regime (SM&CR). These build on the first phase of reforms set out in Policy Statement PS26/6 and legislative changes proposed by the Government in the Financial Services and Markets (FSM) Bill 2026.
1.2 The changes proposed in the FSM Bill remove many prescriptive SM&CR requirements
from legislation. They make regulators responsible for deciding how these requirements should apply in their rules.
1.3 Our reforms aim to maximise the benefit of these changes but depend on the outcome
of the parliamentary process. We are consulting alongside the Bill so we can make changes to our own rules as soon as possible after Royal Assent.
1.4 The Government’s Financial Services Growth and Competitiveness Strategy sets a
shared ambition between the Government, the FCA and the Prudential Regulation Authority (PRA). This is to reduce the regulatory burden of the SM&CR by 50% and reduce the number of roles at banks and insurers that require approval by 40%, while maintaining robust individual accountability.
1.5 Our proposals combined with the PRA’s will meet that ambition. The Cost Benefit
Analysis (CBA) in Annex 2 provides further detail.
1.6 In developing our proposals, we were guided by the following principles:

Maintaining robust individual accountability and conduct standards.
Enabling effective regulation across our authorisation, supervision and enforcement
functions.
Moving to a simpler, outcomes‑based regime.
Being clear about who is regulator-approved and who is firm-assessed.

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1.7 Table 1 summarises our main proposals, which are set out in more detail in Chapters 3
to 6.
Table 1: Summary of SM&CR Phase 2 proposals
Senior Managers
Regime
Fewer SMF approvals (Q1-Q5)

Make SMF5 and SMF10-15 roles notified.
Remove FCA-only SMF18 and SMF22, with associated responsibilities
reallocated to other SMFs.
Clarify and narrow SMF7 definition for solo-regulated firms.
Make transitional arrangements for SMF applications and
notifications around commencement.
Time-limited and conditional approvals (Q6)
Allow dual-regulated firms, solo-regulated firms in dual-regulated
groups and Enhanced firms to apply for time-limited or conditional approvals. We expect such requests to be quite rare. Raise Enhanced firm thresholds (Q7)
Reform the Significant SYSC firm threshold, and raise other
thresholds, so fewer firms are classified as Enhanced.
Temporary SMF cover: 12-week rule (Q8)
Extend the period for submitting an SMF application or notification
under the rule from 12 to 18 weeks.
Replace the ‘reasonably unforeseen’ test with ‘reasonable use’.
Statements of Responsibilities (SoR) (Q9-Q10)
Remove the requirement to submit revised SoRs to us. Firms will still
be required to maintain up-to-date internal SoRs.
Remove SoR requirements where one individual performs all SMF
roles in a firm.
Management Responsibilities Maps (MRM) (Q11)
Remove the requirement to submit revised MRMs to us. Firms will still
be required to maintain up-to-date internal MRMs.
Prescribed Responsibilities (PR) (Q12)
Remove 9 PRs.
Retain the following PRs:
For Core and Enhanced firms: A (Senior Managers Regime),
D (financial crime) and Z (CASS).
For Enhanced firms only: J-3 (oversight of outsourced internal audit).
SMF applications, forms and reporting (Q13-Q14)
Remove certain supporting document requirements for SMF
applications and not require them for SMF notifications.
Remove Approved Persons forms from the Handbook and make
minor amendments to them, making them easier and quicker to use and update.

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Certification and the Directory
Certification Regime (Q15)

Remove the Certification Regime and instead rely on other rules to
achieve similar outcomes.
Extend relevant guidance on competence and suitability under
SYSC 3.1.6R and SYSC 5.1.1R to insurers, managing agents and the Society of Lloyd’s. Regulatory references for Certified Persons (Q16)
Remove regulatory reference requirements for previously certified
persons.
The Directory (Q17)
Retire the Directory and end associated reporting and attestation.
Alternative approaches (Q18)
Seek views on which features should be retained if the Certification
Regime, regulatory references or Directory are not removed. Conduct Rules Conduct Rules training (Q19)
Replace the training requirements with an obligation to notify staff of
the applicable Conduct Rules and consequences of a breach.
Conduct Rule breach reporting (Q20-Q24)
For most non-SMF staff, raise the threshold for reporting breaches,
so only disciplinary action that results in a final written warning or dismissal is reported.
Allow up to 14 months to report final outcomes for most non-SMF
staff.
Streamline the reporting form and move it out of the Handbook.
Retain existing reporting requirements for SMFs.
Clarify that a COCON determination is not required where disciplinary
action would not be reportable.
Make consequential changes to the regulatory reference template to
reflect revised FCA and PRA reporting thresholds.
Sole traders (Q25)
Bring sole traders into scope of COCON.
Implementation Implementation timeframe (Q26)
Publish final rules in H1 2027 and implement them around six months
later, in H2 2027.
1.8 If the Certification Regime is removed, we would expect to make consequential changes
to our Handbook to refer instead to the remaining elements of the regime. Pending the outcome of this consultation, we have used 'Senior Managers and Conduct Rules Regime' as a placeholder in the draft instrument.

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Who this applies to
1.9 Our proposals will apply to all firms already in scope of the SM&CR, including
third‑country branches, as well as firms that are due to come into scope, such as cryptoasset firms. We refer to firms in scope of the SM&CR as 'SM&CR firms'.
1.10 Firms regulated by both the PRA and FCA (dual-regulated firms) should also review the
PRA’s CP14/26. This will help them understand all relevant proposals. Outcomes we are seeking and measuring success
1.11 The SM&CR aims to reduce harm to consumers and strengthen market integrity. It does
this by ensuring individuals are accountable to their employers and regulators and meet expected standards of conduct. Feedback to DP23/3 and CP25/21 suggests the SM&CR achieves these objectives.
1.12 Our proposals seek to continue delivering these outcomes while improving the
efficiency of the regime and reducing regulatory and compliance burden. More streamlined and clearer requirements should improve compliance, support more consistent application across firms, improve consumer outcomes and strengthen market integrity.
1.13 A more efficient regime could also support competition between financial services
firms, which benefits consumers and supports growth. We expect that reducing process requirements, while retaining important protections, will be particularly beneficial to smaller firms with less formalised compliance functions.
1.14 Our proposals further the FCA Strategy to be a smarter regulator and support growth.
Alongside this, we are investing in technology to improve our forms and reporting processes. This will help us use our resources more efficiently and simplify firms’ application and reporting processes.
1.15 A robust accountability regime supports outcomes-focused and future-proof
regulation. It contributes to the UK financial sector’s reputation for high standards. Our proposed changes will also make the regime more efficient. Combined, these support our secondary objective to foster the UK’s international competitiveness and growth.
1.16 We set out the outcomes we seek and how we will measure success in Table 2. We
welcome views on these as part of this consultation.

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Table 2: Outcomes we seek and how we will measure success
Outcomes we seek What would this achieve? How will we measure success? Firms continue to maintain high standards of individual accountability and conduct We expect the regime to continue to reduce harm to consumers and strengthen market integrity by continuing to ensure individuals are accountable for their conduct and competence and supporting healthier firm cultures. Consumers experience positive outcomes. Respondent feedback that the overall aims of the regime are well understood, with greater clarity around internal structures and responsibilities. Monitoring Supervisory and Enforcement action taken against firms under SM&CR. Increased proportionality of SM&CR requirements We expect the proposed changes to focus the regime on the elements that are most effective in protecting consumers and markets. Views from respondents on the CBA in this CP. Reduction in SMF applications while retaining high standards of governance and accountability in SMF population. Reduced frequency of SoR submissions, particularly for dual-regulated and Enhanced SM&CR firms. Fewer firms in scope of the Enhanced Regime thresholds. Number of Conduct Rule breach reports relating to non‑SMF employees. Improved efficiency of SM&CR requirements Reduced compliance burden and costs. We and firms can redirect resources to priority needs. Greater clarity on the application of SM&CR requirements Higher levels of compliance in the areas of the SM&CR in which we provide updated or new rules and guidance. Number of SM&CR related enquiries from firms on relevant areas. Views from firms, consumer groups and other relevant stakeholders. Next steps
1.17 Please respond to the questions in this CP by 22 January 2027 using our electronic
survey (see Chapter 7). We will review the feedback and publish final regulatory requirements in a Policy Statement (PS) expected in the first half of 2027.

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Chapter 2
The wider context
Background of the SM&CR
2.1 The SM&CR is an individual accountability regime. It strengthens market integrity and
helps reduce harm to consumers by making senior managers personally accountable for their areas of responsibility. It also sets standards of individual conduct that apply directly to staff. The Financial Services and Markets Act 2000 (FSMA) sets out the SM&CR framework, and we and the PRA make rules to implement it.
2.2 The SM&CR already applies proportionately to a wide range of firms, with diverse
business models and corporate structures. Dual-regulated and solo-regulated Enhanced firms are typically subject to the most requirements. Solo-regulated Core and Limited Scope firms are subject to progressively fewer requirements.
2.3 The SM&CR has applied to the banking sector since 2016. It was then extended across
the rest of the financial sector in stages. We began reviewing the SM&CR in December 2022, progressing as shown below.

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Figure 1: SM&CR Review Timeline
2016 to 2021 – application of SM&CR
SM&CR applied to banking sector in 2016.
By 2021, SM&CR was applied in full to most regulated firms. March 2023 – Discussion Paper (DP) & Call for Evidence (CfE) publications FCA and PRA jointly published DP1/23. The Treasury published a CfE, to review the legislative framework. April 2026 – Phase 1 Policy Statement (PS) publications Final rules were published in PS26/6, alongside the PRA’s PS12/26, making initial changes in areas within our control so that firms could realise the associated benefits more quickly. May 2026 – FSM Bill introduced into Parliament The Treasury introduced legislative reforms to the SM&CR framework through the FSM Bill. July 2025 – Phase 1 Consultation Paper (CP) publications The FCA published CP25/21, in parallel with the PRA’s CP18/25. CP25/21 and CP18/25 consulted on the first phase of SM&CR changes. The Treasury also published its Consultation on legislative changes. April 2026 – The Treasury's consultation response publication The Treasury published its consultation response which showed support for the legislative changes needed to enable further streamlining of the regime. October 2026 – Phase 2 Consultation Paper The FCA and the PRA published their respective CPs. December 2022 – SM&CR Review Government announced a review of the SM&CR.

Government announced a review
of the SM&CR.
SM&CR applied to banking sector
in 2016.
By 2021, SM&CR was applied in full
to most regulated firms.
FCA and PRA jointly published
DP23/3.
The Treasury published a CfE
to review the legislative framework.
The FCA published CP25/21, in
parallel with the PRA’s CP18/25.
CP25/21 and CP18/25 consulted on
the first phase of SM&CR changes.
The Treasury also published its
Consultation on legislative changes.
Application of SM&CR SM&CR Review Discussion Paper (DP) & Call for Evidence (CfE) publications Phase 1 Consultation Paper (CP) publications 2016 to 2021 December 2022 March 2023 July 2025
The Treasury published its
consultation response which showed support for the legislative changes needed to enable further streamlining of the regime.
Final rules were published in PS26/6,
alongside the PRA’s PS12/26, making initial changes in areas within our control so that firms could realise the associated benefits more quickly.
The Treasury introduced legislative
reforms to the SM&CR framework through the FSM Bill.
The FCA and the PRA published
their respective CPs (CP26/37 and CP14/26).
The Treasury's consultation response publication FSM Bill introduced into Parliament Phase 2 Consultation Paper Phase 1 Policy Statement (PS) publications April 2026 April 2026 May 2026 October 2026

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2.4 In CP25/21, we invited views on reforms to explore in the second phase of the review,
subject to legislative change. This consultation reflects that feedback, engagement with industry and feedback from the independent Statutory Panels.
2.5 Respondents strongly supported further reform of the SM&CR following legislative
change, with particular support for:

reducing the number of Senior Management Functions (SMFs) that require
regulatory approval
streamlining the SMF application process and SMF-related requirements
changing the Certification Regime and Conduct Rules reporting.
2.6 Some respondents also stressed that firms value the regime. They cautioned against
changes that would weaken it, as it was meeting its intended purpose.
2.7 We have worked closely with the PRA to develop a coordinated set of proposals for
dual-regulated and solo-regulated firms. Where our proposals differ, we explain why we propose a different approach. Rebalancing Risk
2.8 We recognise that achieving better outcomes may sometimes mean accepting a degree
of additional risk, as set out in our Strategy.
2.9 Our proposals streamline or remove elements of the SM&CR that impose significant
compliance and administrative costs, while retaining the core framework of Senior Manager accountability and Conduct Rules. As we set out in the consultation and CBA, although some risks would increase, important safeguards remain. We consider our proposals reduce requirements where the available evidence does not show the benefits of those requirements outweigh the costs.

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Chapter 3
Senior Managers Regime
3.1 This chapter sets out proposed reforms to the Senior Managers Regime (SMR). We seek
feedback on a package of reforms that aims to maintain high standards of individual accountability and conduct while making the regime more proportionate and easier to operate.
3.2 Our proposals will reduce the number of Senior Management Function (SMF)
applications, streamline administrative processes, provide more flexibility when SMF vacancies arise and reduce the number of firms subject to the Enhanced regime.
3.3 These changes require accepting some risks may increase. For example, where we
review fewer SMF applications, the risk of firms appointing individuals we would not have approved as SMFs may increase. Removing process requirements for Prescribed Responsibilities (PRs) and Statements of Responsibilities (SoRs) might increase the risk that firms do not allocate responsibilities clearly or keep them up to date.
3.4 We consider our proposals strike an appropriate balance between reducing burden and
maintaining effectiveness. The SM&CR has been in force for several years and firms have become experienced in operating it and embedding individual accountability. We consider the regime now needs fewer prescriptive regulatory requirements to operate effectively. We welcome views on this.
3.5 Some of our proposals only affect dual-regulated and Enhanced SM&CR firms. These
include our proposals below on reducing the number of SMF applications, the SMF7 Group Entity SMF, Management Responsibilities Maps (MRMs) and the thresholds for Enhanced firms. In addition, our proposals on time-limited and conditional approvals will apply to solo-regulated firms in groups that include dual-regulated firms, as well as to dual‑regulated and Enhanced firms.
3.6 Our other proposals for changes to the SMR will affect all firms. These include the
12-week rule, SoRs, PRs at Core firms, and streamlining SMR processes. Core and Limited Scope firms may wish to focus on the sections relevant to them, from paragraph 3.73 onwards.
3.7 We have split the proposals into two sections. The first section sets out proposals for
dual-regulated and solo-enhanced firms only. The second section sets out proposals which are more broadly applicable and potentially apply to all firm types. Reducing the number of SMF applications
3.8 We have already significantly reduced the time it takes us to assess SMF applications.
For example, in our most recently published data, 98.3% of applications were determined within 2 months, compared to 89.6% within 3 months (our previous metric) around the time of the announcement of the Edinburgh Reforms in 2022.

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3.9 In addition, in July 2025, we committed to voluntarily meet the proposed future
statutory determination deadline of 2 months for SMF applications and complete at least 50% of SMF approval applications within 35 days. We have already updated our processes to meet the new requirements ahead of their implementation and will continue to make operational improvements. Respondents to DP23/3 and CP25/21 identified the SMF approvals process as a significant source of burden, particularly where applications take longer to determine. Some respondents told us the regime requires too many SMF roles in Enhanced and dual-regulated firms, rather than focusing on the most senior individuals.
3.10 We already take a proportionate approach: dual-regulated and Enhanced firms have
more SMFs than Core and Limited Scope firms. The proposals in the FSM Bill will mean we can stop requiring every Senior Manager to be pre-approved and allow firms to notify us of some appointments instead.
3.11 We have considered how to use this flexibility while maintaining a robust individual
accountability regime. We propose to remove some of these additional roles that apply to Enhanced and dual-regulated firms and make other roles notified. We are not proposing changes to SMF roles in Core and Limited Scope firms. SMF notification
3.12 We propose to make several SMF roles at dual-regulated and Enhanced firms subject to
regulatory notification rather than approval. Under SMF notification, firms will appoint certain SMFs by sending a notification instead of applying for approval. This should significantly reduce the time needed to make these appointments since firms will not need to wait for our approval.
3.13 To maintain robust individual accountability among senior managers, we intend notified
SMFs to be subject to the same requirements and expectations as approved SMFs. This means:

Firms will still need to vet these individuals for the SMF roles and complete the
same checks before appointing them. Responsibility for the firm’s vetting of SMF candidates will remain with the holder of Prescribed Responsibility A.
The Duty of Responsibility and Senior Manager Conduct Rules will continue to apply
on an ongoing basis to notified SMFs, in the same way as they apply to approved SMFs.
Notified SMFs will appear on the Financial Services (FS) Register. The FS Register
will distinguish between functions requiring approval by the regulator and those normally assessed by firms. Functions to be notified
3.14 Our assessment of which SMFs could become notified functions focused on where
pre‑approval remains a necessary regulatory control. We considered the risk each role poses to our objectives, stakeholder feedback, our experience of SMF applications and the benefits of alignment with the PRA’s approach.

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3.15 In dual-regulated and Enhanced firms, the SMF regime covers a range of functions.
These include non-executive director roles and SMFs responsible for key oversight and assurance functions. We propose that these SMFs should become notified:

SMF5 Head of Internal Audit
SMF10 Chair of the Risk Committee
SMF11 Chair of the Audit Committee
SMF12 Chair of the Remuneration Committee
SMF13 Chair of the Nomination Committee (FCA only at dual-regulated firms)
SMF14 Senior Independent Director
SMF15 Chair of the With-Profits Committee (FCA only at dual-regulated firms)
3.16 At dual-regulated firms, SMF13 and SMF15 are FCA functions and all others in the above
list are PRA functions. There are additional PRA functions that the PRA has proposed to make notified – please refer to the PRA’s CP14/26 for details.
3.17 We consider that making these roles notified presents a relatively low risk to our
regulatory objectives. These roles are important to effective governance, oversight and assurance. However, they do not usually involve the same level of day-to-day executive control as the SMFs we propose to retain as approved functions.
3.18 While there is a risk that some individuals might be appointed who would not have been
if regulatory approval had been required, important safeguards remain, as described above. This means firms and regulators can still hold them accountable for their actions. So, we consider notification to be a proportionate control for these roles.
3.19 We estimate these changes will reduce SMF applications from FCA solo-regulated
Enhanced firms by about 15%.
3.20 We intend to keep our approach to notified SMFs under review, to see whether any
changes are needed. If we find that firms are making unsuitable appointments or failing to undertake appropriate scrutiny, we may consult on reintroducing the need for pre‑approval. If notification is working well, we may also conclude that it could be extended to other roles.
3.21 Given the current profile of operational risks in financial services, particularly those
stemming from frontier AI systems and cyber risks, we propose to retain the Chief Operations Function (SMF24) as pre-approved since holders of this function will often have responsibility for activities most exposed to these risks. However, alongside the PRA, we intend to review whether this approach remains necessary 2 years following implementation of the Phase 2 reforms. Question 1: Do you agree with our proposals on which Senior Management Functions would be notified?

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The notification process
3.22 We propose a simple and streamlined notification process, aligned with the PRA. This
will allow firms to appoint relevant SMFs quickly and efficiently, while minimising process and burden.
3.23 Before submitting a notification, firms will need to assess whether an individual is fit
and proper to perform the role. This would include, where required, obtaining regulatory references, conducting criminal records checks, confirming the candidate has the right to work in the UK, and preparing a SoR.
3.24 Once firms have completed vetting and the fitness and propriety (F&P) assessment,
they will submit notifications via the My FCA portal. We intend to only carry out automated checks to confirm the form is complete and the individual is not prohibited.
3.25 Firms will be able to submit a notification up to 3 months in advance of an individual
taking up a role. This helps support orderly transition planning.
3.26 For immediate appointments, the notification will become effective on the date we
acknowledge receipt. The SMF will be added to the FS Register shortly after submission.
3.27 If the firm submits the notification in advance, it will become effective on the specified
start date. The SMF will be added to the FS Register on the effective date. A firm that has submitted an advance notification can withdraw it before the effective date.
3.28 We are still considering how notification will be made and will provide more detail
in due course. We intend to request less information than currently required in the existing Short Form A for SMF applications. We would ask for the candidate’s details, confirmation that a F&P assessment has been completed according to the requirements, and a SoR and MRM (for firms that require them). We do not intend to require any other supporting documents.
Figure 2: Notification Process
Firm assesses SMF candidate’s fitness
& propriety and makes suitability decision Limited automated validations conducted to prevent invalid submissions eg of prohibited individuals Firm submits an SMF notification to the regulators via the FS Gateway Notification becomes effective on the later of:
acknowledgement of receipt or the future effective date FS Register is automatically updated Requiring pre-approval for notified functions in exceptional cases
3.29 Under the FSM Bill the regulators could, in certain circumstances, require a firm to seek
approval for a function that would otherwise be subject to notification. We expect to use this power rarely, and only where we have specific concerns about a firm. We may use this power for all notified SMFs at a firm. It will apply only to future appointments to those functions. It will not affect existing notified SMF appointments, even if the notification has been submitted but the individual has not yet started the role.

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3.30 We would use our existing s.55L FSMA powers to impose this requirement. The usual
statutory safeguards would continue to apply.
3.31 To give firms greater certainty about how we may use this power, we propose to give
examples. These include cases where:

We have serious concerns about a firm’s governance.
We have serious concerns about a firm’s ability or willingness to assess the fitness
and propriety of notified SMFs.
A role covered by a notified SMF is of particular importance to the firm’s safety and
soundness, based on the circumstances of the firm.
Question 2: Do you agree with our proposals for the SMF notification process and for using the power to require pre-approval for notified functions in exceptional cases? Transitional arrangements for SMF applications and notifications
3.32 We propose transitional arrangements for the start of the notified SMF regime.
Our aim is to minimise applications submitted close to commencement for roles that will become notified functions.
3.33 Firms can continue to submit SMF applications until the new rules come into force.
This includes for roles that will become notified functions.
3.34 Where an appointment will take effect after the new rules on SMF notification come
into force, firms could submit notifications up to 1 month before commencement. We encourage firms to do this as it will help avoid unnecessary work for firms and us.
3.35 If a firm submitted an application for a role which will become notified, and the
application is still being assessed at commencement, we will continue to determine it. This will allow us to act on any adverse findings arising from our assessment.
Figure 3: Early Commencement Timeline
Future dated notifications can take
effect from this date.
Immediate notifications can be
submitted and take effect.
Applications for notification functions
can no longer be submitted.
In flight applications will continue to
be determined.
Notifications future dated for post
commencement can be submitted.
1 month before commencement Commencement

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Question 3: Do you agree with our proposals on transitional arrangements for SMF applications and notifications around commencement? Removing some SMF roles – SMF18 and SMF22
3.36 We propose to remove FCA-only functions SMF18 (Other Overall Responsibility) and
SMF22 (Local Responsibility).
3.37 We have seen these functions used extensively. This can result in many individuals being
approved as Senior Managers, including in roles that were not intended to be SMFs. Currently, SMF18 accounts for 19% of applications at solo-regulated Enhanced firms, while SMF22 accounts for 24% of applications at dual-regulated branches. This can make the regime more burdensome to operate and dilute the SMR’s focus on the most senior individuals.
3.38 Removing these roles will require firms to reallocate their PRs and overall and local
responsibilities to other SMFs. For firms that make extensive use of SMF18 and SMF22, this may require changes to how responsibilities are allocated and documented, even if the affected individuals’ roles do not change substantively.
3.39 To help firms make these changes, we propose to amend SYSC 26 and COCON so firms
can make greater use of delegation, layered management structures and governance and reporting frameworks. This should allow firms to demonstrate accountability in a more proportionate way.
3.40 Many respondents to DP23/3 and CP25/21 considered these functions should not be
SMFs. However, some respondents did find them useful, for example, where they helped firms identify individuals with clear responsibility for particular business areas or UK branch activities not directly covered by another SMF.
3.41 We considered retaining SMF18 and SMF22 and making them notified functions
instead of removing them. However, we propose to remove these roles because we consider the SM&CR can function well without them as SMFs. If, based on feedback to this consultation, we decide to retain them as notified functions, we will not make the proposed changes to SYSC 26 and COCON. Question 4: Do you agree with our proposals to remove the SMF18 and SMF22 functions and make consequential changes to responsibilities? Do you consider we should make them notified SMFs instead?

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SMF7 – Group Entity Senior Manager
3.42 The SMF7 Group Entity Senior Manager Function currently applies to individuals in a
group who exercise significant influence over the activities of an SM&CR firm.
3.43 Firms told us they found it difficult to decide whether some non-executive directors and
group executives exercised significant influence over an SM&CR firm. As a result, some firms have taken a cautious approach to SMF7 applications, potentially including more individuals than required.
3.44 We propose to clarify and narrow the scope of the SMF7 function at solo-regulated
firms, by changing the definition to only include individuals who perform specified group or sub-group functions.
3.45 To meet the definition of an SMF7, an individual will need to satisfy both limbs of the
test: i) they must exercise significant influence over the SM&CR firm’s activities and ii) perform one of the specified functions.
3.46 The functions we propose to include in the SMF7 definition broadly mirror the functions
we intend to retain as approved functions in Enhanced firms:

Chief Executive
Chief Finance
Chief Risk
Chief Operations
Chair of the governing body
Compliance Oversight
Money Laundering Reporting Officer
3.47 So, as an example, if a firm assesses that its group Chief Finance Officer does not
exercise significant influence over the activities of the SM&CR firm, that individual will not meet the revised SMF7 definition. This is despite the presence of the Chief Finance function in the second limb.
3.48 Firms will need to judge whether existing SMF7s meet the new definition. Firms should
assess their current SMF7 population and, if needed, withdraw any individuals who no longer meet the new proposed definition so that they stop holding SMF7 when the rule changes.
3.49 We estimate this will reduce the solo-regulated SMF7 population by about 40%.
3.50 We consider this is consistent with the core principles guiding our review (paragraph 1.6).
The proposed change would focus the SMF7 function and maintain robust individual accountability where group-level influence is most relevant, while making the regime clearer and more proportionate.

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3.51 This would broadly align with the PRA’s proposals to restrict the definition of the
approved SMF7. However, the PRA proposes to retain individuals who meet the first limb as notified SMFs, creating the new notification-only SMF7a designation. We do not propose to create a similar SMF – individuals who meet only the first limb will not be SMFs at solo-regulated firms. This is to maintain consistency with our proposals to remove SMF18 and SMF22. Question 5: Do you agree with our proposals on SMF7? Time-limited and conditional approvals
3.52 Currently, the regulators can approve an SMF application with conditions or time limits.
We can use these powers where necessary to advance our statutory objectives. For example, we may use them where approval is linked to remedial action, or where a firm needs to appoint an individual on an interim basis.
3.53 The existing legislation requires us to issue a decision notice when we apply a condition,
adding additional burden and increasing the time taken to approve the individual. Currently, firms cannot apply for a conditional approval. This means that even if a firm informally requests a conditional approval, we must follow the decision notice process to apply it.
3.54 Time-limited or conditional approvals, whether imposed by us or requested informally by
firms, are relatively rare and generally occur in larger firms.
3.55 The proposed legislative changes will allow firms to apply for time-limited or conditional
approval, where we provide for it. Statutory notices would not be needed where the firm has requested the condition.
3.56 We believe this change may benefit some firms in limited circumstances. We propose to
allow dual-regulated firms, solo-regulated firms in dual-regulated groups and Enhanced firms to apply for time-limited or conditional SMF approval. We do not propose to extend this to other firms because we have seen no evidence of demand from them.
3.57 We intend to integrate requests for time-limited or conditional approval into SMF
application processes.
Question 6: Do you agree with our proposals on time-limited and conditional approvals? Enhanced firm thresholds
3.58 In Phase 1, we raised certain financial thresholds for becoming an Enhanced SM&CR
firm. We updated the existing thresholds to account for inflation since they were first set. We also created a mechanism for updating the thresholds periodically so they will keep pace with inflation.

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3.59 For Phase 2, we have reassessed these thresholds. The Enhanced regime is intended
to apply where a firm’s scale, complexity or potential risk to our objectives justifies the additional requirements.
3.60 Following this reassessment, we propose to raise some thresholds further. We also
propose to change the threshold for some MiFID wholesale markets firms, which is currently based on Significant SYSC.
3.61 We consider the proposed increased thresholds better target the right firms and avoid
applying Enhanced requirements where the incremental risk does not justify creating additional burdens.
3.62 The proposed revised thresholds are set out in the table below:
Table 3: Proposed Enhanced firm thresholds
Type of firm
Current threshold
(as updated in Phase 1) Proposed threshold Consumer credit lenders £130m revenue £200m revenue Asset managers £65bn AUM £100bn AUM Intermediaries £45m revenue £75m revenue Wholesale markets Significant SYSC £750m assets
3.63 For consumer credit firms, asset managers and intermediaries, the thresholds will be
raised by around 50%.
3.64 For wholesale market firms, we propose to replace the existing Significant SYSC
threshold with a simpler, asset-based threshold of £750m in assets, calculated as a 3-year rolling average. This would also be around 50% higher than the existing balance sheet assets element of the Significant SYSC definition, currently £530m. This threshold will be updated periodically in line with inflation.
3.65 There are some other requirements that depend on the Significant SYSC threshold.
We do not propose to change the Significant SYSC definition itself, and these other requirements will still depend on the existing definition.
3.66 We do not propose to alter the remaining Enhanced firm thresholds, for mortgages or
client assets. The mortgage threshold would remain at 10,000 mortgages outstanding, and the client asset threshold would remain as CASS Large. We consider these thresholds continue to provide an appropriate indicator of the complexity of firms in these sectors.
3.67 Firms that are no longer Enhanced will remain subject to the SM&CR requirements for
Core firms, including Senior Manager accountability and the Conduct Rules.
3.68 The PRA is also exploring the indexation of thresholds across banking, insurance and
credit unions, with certain thresholds increasing automatically over time. Some of these thresholds are relevant to the SM&CR. See CP13/26 – Updating regulatory thresholds:
An autopilot approach.

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Requiring firms to comply with the Enhanced regime
3.69 It is not always possible to find a simple financial threshold that adequately reflects the
risk or market impact of all firms in a sector. There may be instances where a firm does not exceed a threshold, but its size, complexity or market impact means the Enhanced regime should apply.
3.70 The SM&CR allows firms to voluntarily opt up to Enhanced. We also already have
guidance (SYSC 23 Annex 1 2.2) that says we may require a Core or Limited Scope firm to comply with the requirements of the Enhanced regime.
3.71 We are proposing to supplement this guidance. This includes consideration of the size,
complexity or market impact of firms, and where firms would meet the thresholds on a group basis. This is particularly relevant to wholesale markets firms, where a single financial threshold may not capture every firm whose activities could have significant market impact.
3.72 We consider this guidance would help ensure the Enhanced regime continues to apply
on a risk basis, while keeping the thresholds simple and predictable. We do not expect to use this guidance often. Question 7: Do you agree with our proposals for changes to the Enhanced tier thresholds? Temporary SMF cover – the 12-week rule
3.73 The existing 12‑week rule allows firms to appoint an individual to cover for a Senior
Manager without regulatory approval where the absence is temporary or reasonably unforeseen, and the appointment is for less than 12 consecutive weeks. We made changes in Phase 1 to allow firms that use the rule up to 12 weeks to submit an SMF application rather than to get it approved.
3.74 Respondents to the CP welcomed this change. However, some said the period should
be longer to give firms more flexibility when managing temporary gaps. Respondents also said it could be difficult and complex to determine whether an absence was reasonably unforeseen, which could lead to confusion and inconsistent use of the rule. They suggested it would be more efficient to allow firms to use the rule more widely.
3.75 We propose to extend the period for firms to submit an SMF application or SMF
notification from 12 to 18 weeks. We consider it important for effective regulatory controls that individuals only perform a Senior Manager role without our approval or notification where necessary and for a limited period. Extending the period from 12 to 18 weeks could allow an individual that might not be suitable for permanent appointment to perform an SMF role for longer. However, the impact is mitigated by the planned reduction in the statutory deadline for determining SMF applications from 3 to 2 months. This means the length of time an individual can perform an SMF role before approval takes effect will remain similar.

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3.76 We are also proposing to remove the requirement that the rule can only be used where
the absence of the SMF is ‘reasonably unforeseen’ (SUP 10C.3A.6R(2)(b)). This proposal relates to FCA solo-regulated firms and FCA functions in dual-regulated firms only.
3.77 We consider the ‘reasonably unforeseen’ test can be difficult to apply in practice and
may discourage appropriate use of the rule. We propose to replace it with rules on ‘reasonable use’, based on the guidance introduced in Phase 1 (SUP 10C.3A.15G‑17G). This is intended to be clearer and more consistent for firms, while maintaining appropriate safeguards. We also propose guidance that, where an absent SMF's responsibilities are reallocated, firms should ensure there is clear accountability for those responsibilities, including where the allocation is temporary.
3.78 The PRA proposes to retain the ‘reasonably unforeseen’ requirement for dual-regulated
firms. As a result, the FCA’s proposed ‘reasonable use’ standard would apply only to FCA functions in dual-regulated firms, while PRA rules continue to apply to other functions. This would mean different temporary cover arrangements applying within the same dual-regulated firm, which could add complexity.
3.79 An alternative approach would be to remove the ‘reasonably unforeseen’ requirement
only for SMF roles in FCA solo-regulated firms, while retaining it for all SMF roles in dualregulated firms to align with the PRA. This would avoid the need for dual-regulated firms to apply different standards to different SMF roles. We welcome views on whether this approach would be preferable to our proposal. Question 8: Do you agree with our proposed changes to the 12-week rule? Should the revised standard apply to FCA SMFs in both solo-regulated and dual-regulated firms, or only to those in FCA solo-regulated firms? Statements of Responsibilities (SoR)
3.80 Respondents to DP23/3 and CP25/21 said that SoRs are important and useful
tools for clearly allocating responsibilities to Senior Managers and supporting individual accountability. However, they also said the way SoRs operate in practice is administratively burdensome. They highlighted reporting requirements as a particular issue. They said that SoRs need to be updated relatively often, especially where there is a long list of PRs.
3.81 Under existing legislation, all SMFs must have a SoR and submit it to the regulators when
applying for an SMF role and whenever they make significant changes to it.
3.82 In Phase 1 we made changes to reduce SoR reporting. We allowed firms to notify us of
changes to SoRs up to 6 months after a change is made rather than immediately.
3.83 The proposed legislative changes remove the statutory requirement to provide SoRs,
which allows us to make further reforms.

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Removing the requirement to report changes of responsibility
3.84 We propose to remove the requirement for firms to submit updated SoRs whenever
responsibilities change. This would remove the Form J reporting requirement, which firms have identified as a significant source of burden.
3.85 Firms will still need to submit a SoR with an SMF application or notification (unless the
individual is not required to have a SoR as a single SMF). They will also need to keep SoRs up to date internally and retain records of superseded SoRs.
3.86 This means firms can provide a current or past SoR to us on request where we need to
understand an individual’s area of responsibility. This maintains the fundamental SM&CR principle that individuals’ responsibilities are clear and documented, while reducing the burden of routinely submitting updated SoRs to us.
3.87 We propose a 6-year retention period for SoRs for most firms. The PRA has proposed
a 10-year retention period for some dual-regulated firms. We would apply the same retention period to these firms for consistency with the PRA. Question 9: Do you agree with our proposal to remove the requirement to report significant changes in responsibility? Not requiring a SoR where there is a single individual performing SMF roles at the firm
3.88 Respondents told us that SoRs provide limited value at smaller, less complex firms
where responsibilities are divided between very few individuals. Our regulatory experience supports this view.
3.89 We propose to remove the SoR requirement for firms where only one individual
performs SMF roles. This will benefit approximately 18,800 firms.
3.90 This means that a firm will not need a SoR where only one individual performs SMF
roles, even if that individual performs more than one SMF role. For example, where the same individual performs SMF3, SMF16 and SMF17. If the firm later has more than one individual performing SMF roles, all SMFs at the firm will need a SoR, including the SMF who did not previously have one.
3.91 To provide further clarity, we propose to add guidance to SYSC 24A.8.5G to explain
how the single-SMF SoR exclusion applies in the context of SMF applications and notifications. Question 10: Do you agree with our proposal to disapply SoRs from firms with a single individual performing SMFs?

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Management Responsibilities Maps (MRM)
3.92 The MRM requirements apply to dual-regulated firms and Enhanced solo-regulated
firms. We propose to make targeted changes that align with the PRA’s approach.
3.93 Consistent with our proposal to remove SoRs where only one individual performs SMF
roles, we also propose removing the MRM requirement for those firms. An MRM is of limited value where all SMR responsibilities sit with one individual. This proposal would benefit a small number of dual-regulated firms and solo-regulated Enhanced firms, without introducing significant risks.
3.94 We also propose to remove the requirement to routinely provide MRM updates to the
regulators. However, firms will still need to keep MRMs up to date internally and provide copies to us on request. This means we can continue to access a current or past MRM where we need to understand how responsibilities are allocated across a firm’s senior management. We also propose a 6-year retention period for MRMs, or 10 years for some dual-regulated firms to align with PRA proposals.
3.95 We propose to make other consequential amendments and move some material from
rules to guidance, to better align our MRM requirements with the PRA’s approach (see SYSC 25).
3.96 Firms have also told us that it is unclear whether an MRM submitted as part of an SMF
application should show the firm’s current governance arrangements or those that would apply if the appointment were approved. We propose to clarify that it should show the firm’s intended governance arrangements following the appointment. This would give firms a clearer requirement and make it easier for regulators to assess the application. Question 11: Do you agree with our proposals on MRMs? Prescribed Responsibilities (PR)
3.97 PRs are specified responsibilities that must be allocated to SMFs. Their aim is to ensure
that responsibility for specified areas is clearly allocated to a Senior Manager. Enhanced firms have a longer list of PRs than Core firms while Limited Scope firms have no PRs.
3.98 While PRs help ensure important responsibilities are clearly allocated, we recognise
concerns that the current list of PRs may be more extensive than necessary to achieve that objective.
3.99 We propose to remove 9 PRs and retain only the following:
For all Core and Enhanced firms:

A – Responsibility for the Senior Managers Regime
D – Responsibility for financial crime
Z – Responsibility for CASS

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For Enhanced firms only:

J-3 – Responsibility for oversight of outsourced internal audit.
3.100 We consider it important to retain these 4 because they support core elements of the
SM&CR and areas of particular importance to our objectives.
3.101 Although PR A already includes responsibility for vetting SMF candidates, we propose to
amend its wording to clarify the duties the holder of this PR has regarding the vetting of SMF candidates, SMF notifications and SMF applications.
3.102 Our proposal to remove certain PRs does not remove the underlying requirements.
It only removes the PR mechanism for separately recording responsibility for that area.
3.103 Firms will still need to maintain SoRs where required and accurately record SMF
responsibilities. We do not generally expect firms to reproduce responsibilities previously covered by removed PRs as overall, local or other responsibilities. Firms should only do this where it is not clear from the nature of the SMF role that the individual has that responsibility. For example, a firm will not need to convert an SMF11’s responsibility for oversight of the internal audit function into another responsibility in the SoR.
3.104 We recognise that these changes to PRs will require some firms to update their SoRs
and MRMs. We propose that Core firms will not need to update SoRs solely because of the proposed PR changes. They could instead make those updates when they next make a separate change to a SoR.
3.105 Enhanced and dual-regulated firms will have a wider range of SoR changes to consider
due to our proposals to remove functions and amend overall responsibilities. These are likely to involve a more significant reallocation of responsibilities across individuals at the firm. They would therefore need to make the necessary changes to SoRs and MRMs at commencement.
3.106 The PRA also proposes to remove some PRs but will retain a longer list. This means
some PRs that are currently both FCA and PRA PRs for dual-regulated firms will become PRA-only PRs. Question 12: Do you agree with our proposals on Prescribed Responsibilities and transitional arrangements for SoRs? Streamlining SMF application requirements and changing forms
3.107 Respondents identified friction in the SMF approvals process as a source of burden.
They said that forms were long and cumbersome, our systems should be improved, and some of the information we require is not central to our assessment of a candidate’s fitness and propriety.

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3.108 In Phase 1 we made changes to streamline the SMR application process. In Phase 2, and
in alignment with the PRA, we propose further improvements to the application and notification process. We want to reduce unnecessary friction while ensuring we receive sufficient information to assess candidates effectively.
3.109 We propose to remove the following supporting document requirements for SMF
applications and notifications which we consider are not material to our assessment of fitness and propriety:

The requirement for certain firms to provide a summary of the handover document
with an SMF application. The underlying requirement to ensure effective handovers will remain where it applies.
The requirement for certain firms to include MiFID annexes in Approved Persons
forms. We explain this proposal in more detail below.
3.110 In addition, we propose to remove the Approved Persons forms in SUP 10C from the
Handbook. Some of these forms have already been moved to our website, and we propose to move the remaining forms there as well. We would also remove related references, rules and guidance from the Handbook, except where rules are needed to give effect to legislation. This would make the forms easier and quicker to update, while bringing information about the forms and how to use them together in one place. This should help firms better understand our requirements.
3.111 Alongside the proposals we are consulting on, we also plan to make minor changes to
the Approved Persons forms. These include removing or simplifying some questions and removing some required attachments, for example, the organisational chart. Question 13: Do you agree with our proposals on SMF application requirements and forms? Other reporting changes MiFID firms report of changes to the management body
3.112 Currently, MiFID investment firms and MiFID optional exemption firms are required to
report details of their management body and changes to it under the MiFID authorisation and management body change notification ITS (Implementing Technical Standards). Firms report either through the standalone notification form in SUP 15.16 or by submitting MiFID annexes as part of an Approved Person application. Similarly, firms applying for authorisation must complete 2 forms that duplicate information collected elsewhere in the application process.
3.113 These reporting requirements derived from EU legislation, so can now be changed.
We propose to remove them for solo-regulated firms, both as part of an SMF or new firm authorisation application, and under SUP 15. We consider the forms submitted alongside applications duplicate existing FSMA and SMR requirements and are unnecessary for determining applications. In the case of non-SMF changes to the

26 management body, the form provides information about non-SMF directors that we are not proposing to routinely collect elsewhere (see Directory section, below). Removing the requirement would involve exercising our power to revoke the ITS referred to above.
3.114 Revoking the ITS will also have the effect of removing several duplicative EU-derived
obligations on us, which are covered by other requirements and processes:

Designating a contact point for handling information relating to applications for
authorisation as one of these firms.
Acknowledging receipt of applications within a specified period.
Requesting additional information from applicants when required.
Communicating our decision to grant or refuse the application within a
specified period.
Notified Persons
3.115 Overseas firms are required to report details of persons performing certain positions.
This requirement is set out in SUP15.4 and operationalised under Form F ‘Changes to Notified Persons’. We propose to remove this requirement and decommission Form F as it largely duplicates other SMR requirements. Question 14: Do you agree with our proposals to revoke the MiFID authorisation and management body change notification ITS; remove the MiFID management body reporting requirements; and to remove the Notified Persons reporting requirement?

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Chapter 4
Certification and the Directory
4.1 This chapter sets out our proposals to remove the Certification Regime and the
Directory. We also invite feedback on potential alternative approaches. The Certification Regime
4.2 The Certification Regime aims to support good conduct and ensure the fitness and
propriety of individuals below the Senior Manager level. The regime is currently set out in legislation, and regulators are required to designate certain roles as certification functions.
4.3 For staff in certification functions, firms are currently required to:

Assess fitness and propriety when they hire an individual (legislative requirement).
Reassess and certify fitness and propriety annually after that (legislative
requirement).
Obtain regulatory references (FCA requirement).
Report up-to-date information for publication in the Directory of certified persons
and other Directory persons (FCA requirement).
4.4 However, the Certification Regime is unusual internationally. Most territories that
have introduced regimes similar to the SM&CR have not introduced an equivalent Certification Regime.
4.5 The reforms set out in the FSM Bill would remove the Certification Regime from
legislation. This allows us to remove corresponding requirements from our rules and consider a more proportionate approach.
4.6 Feedback to CP25/21, the Treasury’s Call for Evidence and wider stakeholder
engagement suggest that the Certification Regime is a significant source of firm burden. Many respondents said certification creates administrative burdens beyond their usual employment practices, without clear evidence it enhances individual accountability or consumer protection.
4.7 Respondents said the regime captures a wide range of roles and requires firms to
operate often duplicative processes. These involve tracking around 139,000 individuals performing approximately 261,000 functions.
4.8 Respondents also said that identifying whether a person is performing a certification
function can be complex and burdensome. They said issuing certificates and recertifying individuals annually is particularly burdensome and offers limited benefit.

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Our proposal
4.9 We propose to remove the Certification Regime completely.
4.10 Removing the regime will reduce the formal regulatory requirements for firms to
identify, assess, certify and report on individuals performing those roles. We recognise this might increase risks to a limited extent. For example, individuals performing currently certified functions would no longer be subject to the same level of structured fitness and propriety assessment as a Senior Manager. Additionally, firms might place less emphasis on documenting those assessments.
4.11 However, we consider the Certification Regime no longer provides sufficient additional
regulatory benefit, relative to its cost, to justify its continued operation as a standalone regime. The objectives of certification can be achieved more proportionately through other existing requirements on employee competence and suitability operated through a firm’s own processes. Many of these requirements are very similar to those under the Certification Regime, as set out below.
4.12 We propose to rely on these existing requirements instead of the more rigid and labourintensive certification requirements. We consider this retains the core protections
needed for consumers and markets, while significantly reducing regulatory costs and administrative burden. It also allows firms and us to focus resources on areas more directly linked to consumer outcomes and market integrity. Fitness & Propriety (F&P) assessment and the ongoing competence and suitability of individuals
4.13 Firms will remain responsible for ensuring individuals in relevant roles are competent,
suitable and meet appropriate standards of conduct. This is central to our view that existing requirements can address the risks targeted by the Certification Regime in a more proportionate way.
4.14 The sections below explain the existing requirements that would continue to support
firms’ assessment of fitness, propriety, competence and conduct.
4.15 The competent employee rules in SYSC 3.1.6R and SYSC 5.1.1R already require firms to
employ personnel with the skills, knowledge and expertise necessary to carry out the responsibilities allocated to them.
4.16 Under these rules, most firms are expected to assess an individual’s honesty and
competence upon appointment and whenever there is reason to reassess their suitability. We consider this a more proportionate and efficient approach that will deliver similar outcomes to the Certification Regime, without requiring firms to formally assess and certify fitness and propriety on an annual basis.
4.17 This guidance already applies to most SM&CR firms, but does not apply to insurers,
managing agents or the Society of Lloyd’s. We propose to extend it to these firms to ensure consistency and avoid lowering standards for individuals performing equivalent roles.

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4.18 The Conduct Rules will continue to apply to individuals currently performing certification
roles. In addition, firms will continue to assess competence through standard employer practices, including performance management, employment checks and referencing.
4.19 Firms will also remain subject to relevant existing qualification requirements, especially
for retail investment and mortgage advisers, in TC 2.1, TC App 1 and TC App 4, as well as other Training and Competence (TC) provisions, contained within TC 1, 2 and 3 and TC App 1 and 3.
4.20 Requirements relating to the Statement of Professional Standing (SPS) will continue to
apply to relevant individuals. SPSs must be renewed annually after a person is appointed as a retail investment adviser, independent financial adviser or wealth manager. These will continue to ensure appropriate standards of competence are maintained in these important consumer-facing roles.
4.21 Firms are also expected to make sure their employees are adequately trained and have
the necessary skills, knowledge and expertise to support the delivery of good outcomes for retail customers under the Consumer Duty.
4.22 Taken together, these requirements mean firms will remain responsible for making sure
relevant individuals are competent, suitable and aware of the standards expected of them. We consider this maintains appropriate protections for consumers and markets, while allowing firms to deliver those outcomes through existing obligations and more proportionate internal processes. Question 15: Do you agree with our proposal to remove the Certification Regime? Removal of regulatory references for Certified Persons
4.23 Regulatory references can help firms identify potential conduct and suitability concerns
when recruiting staff. They are intended to support better hiring decisions by allowing firms to obtain relevant information from a candidate’s previous employer(s).
4.24 However, firms said the information obtained for certified persons is rarely of additional
value to other checks they can already perform. They said that obtaining them is a lengthy and resource-intensive process which causes delays in recruitment. It also creates operational challenges for firms when applied to the large population of certification staff, often in roles with shorter notice periods.
4.25 While regulatory references do sometimes provide value, we consider their benefits are
outweighed by their costs and operational burden. So we propose to no longer require firms to obtain regulatory references for individuals who were previously certified.
4.26 Firms will remain responsible for assessing each candidate’s competence and
suitability for a role. They can use employment references or other checks as part of that assessment.

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4.27 Regulatory references will still be required for individuals applying for SMF roles, whether
approved or notified.
Question 16: Do you agree with our proposals on regulatory references for previously certified persons? The Directory
4.28 The Directory of certified and assessed persons contains information on individuals
within the certified population, sole traders and appointed representatives undertaking roles requiring qualification, and non-SMF directors.
4.29 The information in the Directory is provided by firms, who need to keep it up to date
on an ongoing basis and annually attest to its accuracy. Submissions must include information on an individual’s name, role, activities undertaken and, for customer facing roles, details about customer engagement method, workplace location and any memberships of professional bodies.
4.30 The Directory was introduced to provide transparency and confidence in the market.
It makes information about certain individuals working in financial services publicly available. This can help consumers and other users identify individuals associated with regulated firms, and check whether some individuals hold relevant professional memberships or customer-facing roles.
4.31 However, our experience of operating the Directory – together with feedback from
industry – has identified several risks and limitations, including:

Although we do not approve or assess the competence of individuals listed in the
Directory, or verify the information submitted by firms, some users believe that we do.
It does not include any contact details for the individuals listed or mechanism for
users to verify their identity.
It focuses on individuals rather than firms, which can limit its usefulness for
consumers seeking financial services and may cause uncertainty about who they should contact. Consumers may legitimately engage with individuals at firms other than the certified individuals listed in the Directory.
Consumer protections, including Financial Ombudsman Service and Financial
Services Compensation Scheme rights, apply at the level of authorised firms, and are not affected by individuals or the accuracy of their Directory information.
Firms incur ongoing costs in maintaining and updating Directory information.

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4.32 When the Directory was introduced, financial services consumers were intended to be
one of its primary users. However, we have recently launched the FCA Firm Checker, designed specifically for consumers. The FCA Firm Checker enables users to check whether a firm is authorised or registered and whether it has the relevant permissions to provide particular financial services.
4.33 Where concerns arise about an individual acting on behalf of a firm, the FCA Firm
Checker provides firm contact details so those concerns can be raised directly with the firm. We consider this to be a more effective tool than the Directory for supporting informed decision-making and helping consumers identify potential scams.
4.34 Removing the Directory means certain information on individuals will no longer be
available in an FCA-maintained public source. However, we consider this is proportionate in view of the Directory’s limitations, the ongoing cost to firms and the FCA Firm Checker tool.
4.35 We propose to retire the Directory and remove the requirement for firms to provide
information on Directory Persons. Users will continue to have access to relevant information about firms and SMF holders through the FCA Register. Question 17: Do you agree with our proposal to remove the Directory? Alternatives we considered and invite views on
4.36 As set out above, we recognise that the Certification Regime, regulatory references and
the Directory provide some benefits. They can support firms’ assessment of fitness and propriety, provide information to firms and consumers, and contribute to transparency and accountability.
4.37 We acknowledge that removing the Certification Regime represents a significant
change to the current framework and could introduce risks. While we consider the impact of its removal is manageable for the reasons set out above, we invite views on alternative approaches that would retain beneficial elements of the regime.
4.38 For example:

Keeping some or all requirements of the Certification Regime, for a subset of the
8 certification functions.
Retaining some requirements to obtain and provide regulatory references for
individuals in particular roles.
Maintaining elements of the Directory.
4.39 We invite respondents to provide their views on this, including any evidence of the value
of retention, and to provide estimates of the costs and benefits where possible.
4.40 We would also welcome views on any unintended consequences that may arise from our
proposals, and on whether alternative approaches could achieve similar outcomes while preserving more of the benefits of the current regime.

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4.41 If we decide to keep or amend existing parts of the Certification Regime or the
Directory, we do not intend to reconsult.
Question 18: If, following feedback, we decide not to completely remove the Certification Regime, regulatory references and the Directory, which features do you think we should retain? Please provide a rationale and evidence where possible.

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Chapter 5
Conduct Rules
5.1 This chapter sets out proposed reforms to the Conduct Rules. These seek to maintain
strong conduct standards across relevant individuals while making the regime more proportionate and easier to operate. Importance of the Conduct Rules
5.2 The Conduct Rules are a core component of the SM&CR. They apply to all SM&CR firms
and to almost everyone working in those firms, except ancillary staff. In total, this covers around 900,000 individuals.
5.3 The Conduct Rules set minimum standards of behaviour and help promote
accountability across all levels of seniority. The legislation underpinning the regime requires firms to train relevant staff on the rules and notify us of certain breaches.
5.4 The Conduct Rules are an important part of the regime, and we are not changing the
rules themselves. However, proposed legislative changes will allow us to simplify training and breach reporting requirements and bring currently out-of-scope sole traders within the rules. Conduct Rules training requirements
5.5 The legislation currently requires firms to take ‘all reasonable steps’ to ensure
relevant staff understand the Conduct Rules and how they apply to their roles. While this supported the implementation of a new conduct regime, it has also generated significant operational and compliance costs.
5.6 Our CBA and wider stakeholder engagement indicate firms often meet the current
requirements through detailed, role-specific training programmes that can create significant ongoing costs. Now that the regime is well established, we consider the current approach is unnecessarily prescriptive and firms may be able to achieve similar outcomes in less burdensome ways.
5.7 We do not propose to replicate the existing statutory training duty that is being removed
from legislation. Instead, we propose a more proportionate and outcomes-focused requirement that firms ensure all those subject to the Conduct Rules are notified of:

The Conduct Rules that apply to them.
The consequences of breaching those rules.

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5.8 Firms would not have to provide Conduct Rules training but could choose the most
appropriate way to comply with the rule. For example, they could integrate Conduct Rules requirements into wider induction, compliance or conduct communications and processes.
5.9 Removing the training requirement will result in significant savings. But we recognise
it might also increase the risk of staff not being as fully informed about the Conduct Rules, reducing the deterrent effect of the regime. However, we think this risk is small and our changes would achieve an appropriate balance between making sure staff are properly informed and giving firms greater flexibility to meet their obligations in a cost‑effective way. Question 19: Do you agree with our proposed changes to Conduct Rules training requirements? Conduct Rule breach reporting
5.10 The existing legislation requires firms to notify us when they take disciplinary action for
misconduct that amounts to a breach of the Conduct Rules. FSMA defines ‘disciplinary action’ as a formal written warning, suspension, dismissal or the reduction or recovery of remuneration. The legislative changes will allow us to amend the definition of disciplinary action and make other changes to the reporting regime.
5.11 Conduct Rule breach reports provide important information about misconduct in
firms. They support individual accountability and help firms identify and respond to behaviour that falls below expected standards. They help deter misconduct by making it clear it may be reported to the regulators. They also give regulators information about the suitability of SMF applicants, potential patterns of misconduct, firm culture and weaknesses in systems and controls. This can help us identify cases where supervisory, authorisations or enforcement action may be required.
5.12 However, respondents to CP23/20, CP25/18 and CP25/21 told us identifying and
reporting Conduct Rule breaches can be resource-intensive and costly, often requiring input from multiple teams and external advisers. Currently, firms may also need to carry out detailed assessments for minor incidents of limited regulatory significance that provide little supervisory value.
5.13 We propose to make breach reporting more proportionate by targeting more serious
misconduct. We also want to give firms more flexibility and streamline the reporting form. These changes will reduce firm burden and ensure we only receive information about breaches of regulatory significance.

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Proposed approach to breach reporting
5.14 Regulatory reporting requirements vary according to the seriousness of the breach,
the seniority of the individual’s role and whether the firm is solo- or dual-regulated. For most non-SMF staff, the primary reporting route is the annual REP008 regulatory return. We set out below our proposed approach to breach reporting for:
a. non-SMFs only subject to Individual Conduct Rules b. non-SMFs also subject to Senior Manager Conduct Rules
c. SMFs subject to all Conduct Rules.
5.15 Additional reporting requirements apply in dual-regulated firms, as set out in the PRA’s
CP14/26.
Non-SMFs only subject to Individual Conduct Rules
5.16 This category includes almost everyone working in financial services, apart from SMFs
and others subject to the Senior Manager Conduct Rules. We propose to make changes to which breaches must be reported, the information to be reported about those breaches and the timing of reporting. Together, these changes will significantly reduce burden across the entire SM&CR firm population. Raising the reporting threshold
5.17 Our review of past breach reports indicates the current reporting threshold often
captures lower-level misconduct of limited relevance to our regulatory objectives. We propose to raise the reporting threshold to final written warning or dismissal for all staff who are not subject to the Senior Manager Conduct Rules. This will reduce the burden associated with breach determination and reporting by around 30%.
5.18 We recognise this could have an impact on supervisory oversight. However, we consider
this risk is small and sufficiently mitigated by other notification requirements. Further, we do not intend to change the reporting threshold for individuals in the most senior roles. Improving the breach reporting form
5.19 We intend to move the breach reporting form out of the Handbook so we can update its
requirements more easily, consistent with our approach to other SM&CR forms. This will give us more flexibility to improve the way information is reported to us and make breach reporting simpler and less burdensome for firms. We will make parallel updates to SMF breach reporting processes where required.
5.20 We are considering ways to streamline reporting, such as converting free text into
structured questions and including a question on non-financial misconduct. These changes would support wider regulatory processes and make the form easier for firms to complete.

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5.21 We propose to discontinue the rarely used option of hard-copy reporting, currently
only permitted for credit unions. This will improve operational efficiency while ensuring alternative formats remain available to meet accessibility needs. Changing breach reporting timing
5.22 We propose to give firms more flexibility over the timing of breach reporting. This will
allow them to align regulatory reporting with internal processes and reduce the need to submit updates.
5.23 We propose to replace annual reporting with a requirement to notify us of a Conduct
Rule breach within 14 months of imposing disciplinary action. Firms will report only the final disciplinary outcome after any appeal. This will reduce firm burden and increase the accuracy of our records.
5.24 Firms could continue to report on an annual, consolidated basis if they wished, or more
often. The 14-month deadline allows them to maintain a 12-month reporting cycle with an additional 2 months to resolve appeals and report final outcomes. Non-SMFs also subject to Senior Manager Conduct Rules
5.25 This category of senior conduct rules staff currently comprises individuals
providing temporary cover for SMFs, others acting as SMFs without prior approval and non‑executive directors. Those performing an SMF function are subject to Senior Manager Conduct Rules SC1 to SC4 as well as the Individual Conduct Rules. Non‑executive directors are subject to Senior Manager Conduct Rule SC4 and Individual Conduct Rules.
5.26 There will be no change to the types of breaches that must be reported for this category
of staff. We will continue to apply the current FSMA definition of disciplinary action. However, we propose to streamline the way breaches are reported.
5.27 Currently, firms must report breaches of some rules by these individuals immediately,
while breaches of other rules are reported annually. We consider this distinction unnecessarily complex and operationally burdensome, particularly where it means a firm must report the same breach twice.
5.28 We propose requiring firms to report all breaches within 7 business days and removing
the annual reporting requirement. We expect the operational impact of this change to be minimal, given the low number of breach reports we receive concerning such individuals. However, it would simplify firms’ reporting obligations and give us earlier visibility of misconduct by senior individuals. SMFs subject to all Conduct Rules
5.29 There will be no change to breach reporting for SMFs. We will continue to apply the
current FSMA definition of disciplinary action and firms will report breaches in the same way they do now (SUP 10C).

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5.30 Table 4 summarises the proposed reporting requirements under FCA rules for each
category of staff. We are broadly aligned with the PRA except where it proposes reporting on additional types of disciplinary action for staff in certain key roles (see PRA CP14/26). We invite feedback to both regulators on our overall approach.
Table 4: Proposed Conduct Rule breach reporting requirements
Staff group Reportable disciplinary action Breach of any FCA Conduct Rule Non-SMFs only subject to Individual Conduct Rules Disciplinary threshold raised to:

Final written warning
Dismissal
Report final disciplinary outcome within 14 months Non-SMFs also subject to Senior Manager Conduct Rules
Formal written warning
Suspension
Dismissal
Reduction or recovery of
remuneration
Report initial disciplinary outcome within 7 business days SMFs subject to all Conduct Rules
Formal written warning
Suspension
Dismissal
Reduction or recovery of
remuneration
Report initial disciplinary outcome within 7 business days
5.31 There will be no change to existing notification requirements under Principle 11, SUP 15
or SUP 10C. Firms must still notify us promptly of any matters of regulatory significance, including suspected or actual significant breaches of the Conduct Rules. Non-reportable Conduct Rule breaches
5.32 During our review, stakeholders highlighted that firms may undertake detailed Conduct
Rule assessments and retain records, even for minor misconduct that will not be reported to us. They said these were driven by concerns about potential supervisory challenge and regulatory reference requests.
5.33 We propose new guidance clarifying that firms are not expected to determine whether
misconduct amounts to a breach of COCON unless it results in disciplinary action that would be reportable to the regulator(s). This would apply only to notification requirements under SUP 15.11.
5.34 We consider this will provide greater certainty about our requirements, reduce
unnecessary compliance burden and empower firms to manage lower-level conduct issues through internal processes. Question 20: Do you agree with our proposal to raise the breach reporting threshold for non-SMFs only subject to Individual Conduct Rules?

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Question 21: Do you agree with our proposals to improve the breach reporting form? Question 22: Do you agree with our proposals to change breach reporting timelines for non-SMFs? Question 23: Do you agree with our proposed guidance on nonreportable Conduct Rule breaches? Consequential changes to the regulatory reference template
5.35 We propose to update the regulatory reference template to reflect changes to both
regulators’ Conduct Rule breach reporting thresholds. This will support a consistent approach to reporting, record-keeping and disclosure.
5.36 Firms should disclose past breaches if disciplinary action met the reporting threshold
that would currently apply to the role. This means not disclosing a first written warning unless the individual was in an SMF or similar role at the time.
5.37 Firms will, however, continue to disclose any other information relevant to a hiring firm’s
assessment of an individual’s fitness and propriety.
Question 24: Do you agree with our proposed consequential changes to the regulatory reference template? Bringing sole traders into scope of COCON
5.38 Changes proposed in the FSM Bill will enable us to ensure more consistent minimum
standards across financial services by bringing sole traders into scope of COCON. Currently, employees of a sole trader may be subject to the Conduct Rules while the proprietor is not. Sole traders are instead subject to the Principles for Businesses (PRIN 2.1.1R), which set broadly similar standards for firms.
5.39 The proposed changes to FSMA will create a more consistent individual conduct
framework, rather than introduce new standards of behaviour. Sole traders would be subject to both Senior Manager and Individual Conduct Rules, in addition to the Principles for Businesses, reinforcing the standards we expect of regulated firms. Question 25: Do you agree with our proposal to bring sole traders into scope of COCON?

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Chapter 6
Implementation
6.1 We want to implement these proposals quickly so firms can realise the benefits as
soon as possible. Although the changes are aimed at simplifying and streamlining the regime, they will require firms to make changes to processes and will need some time to implement.
6.2 We considered whether some of the proposed changes, such as those relating to
the Certification Regime, could be implemented sooner than others. However, these changes depend on both the outcome of this consultation and the parliamentary process. So we will avoid taking any steps to repeal the regime before reaching a final policy position.
6.3 We intend to publish our finalised rules in H1 2027 and propose to implement the
changes about 6 months later in H2 2027. We consider this should give firms and us sufficient time to make the necessary operational changes. We invite views on this. Question 26: Do you agree that implementation in H2 2027 would provide an appropriate implementation period following publication of the Policy Statement?

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Chapter 7
How to respond
We are asking for comments on this Consultation Paper (CP) by 22 January 2027. Please submit your response using our online survey, which you can access on our website. If you have accessibility or other needs that mean you cannot use the survey, please contact us or use our accessibility service. To read how we will use your response and how it will be disclosed, visit:
Consultation responses: your confidentiality and personal data. Further information about the FCA’s use of personal data can be found on the FCA website at: https://www.fca.org.uk/privacy. Responses to this CP may be shared with the Bank of England and the Prudential Regulation Authority (PRA). This may include your name, contact details (including, if provided, details of the organisation you work for), and opinions or details offered in the response itself. The response will be used to inform the FCA's and PRA's work as regulators, and the Bank of England as central bank, both in the public interest and in the exercise of official authority. We may use your details to contact you to clarify any aspects of your response. Further information about how the PRA uses personal data, including their legal basis for doing so, can be found at: https://www.prarulebook.co.uk/privacy. Further information about how the Bank of England uses personal data, including their legal basis for doing so, can be found at: https://www.bankofengland.co.uk/legal/privacy. When responding, please let us know whether you consent to your name and response being made available to the public. Please be sure to let us know in what capacity you are responding. If you are responding from an organisation, we will assume that the respondent is the organisation and will publish that name, unless you indicate that you are responding in an individual capacity (in which case, we will publish your name).

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Annex 1
Questions in this paper
Question 1: Do you agree with our proposals on which Senior Management Functions would be notified? Question 2: Do you agree with our proposals for the SMF notification process and for using the power to require pre-approval for notified functions in exceptional cases? Question 3: Do you agree with our proposals on transitional arrangements for SMF applications and notifications around commencement? Question 4: Do you agree with our proposals to remove the SMF18 and SMF22 functions and make consequential changes to responsibilities? Do you consider we should make them notified SMFs instead? Question 5: Do you agree with our proposals on SMF7? Question 6: Do you agree with our proposals on time-limited and conditional approvals? Question 7: Do you agree with our proposals for changes to the Enhanced tier thresholds? Question 8: Do you agree with our proposed changes to the 12-week rule? Should the revised standard apply to FCA SMFs in both solo-regulated and dual-regulated firms, or only to those in FCA solo-regulated firms? Question 9: Do you agree with our proposal to remove the requirement to report significant changes in responsibility? Question 10: Do you agree with our proposal to disapply SoRs from firms with a single individual performing SMFs? Question 11: Do you agree with our proposals on MRMs? Question 12: Do you agree with our proposals on Prescribed Responsibilities and transitional arrangements for SoRs? Question 13: Do you agree with our proposals on SMF application requirements and forms?

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Question 14: Do you agree with our proposals to revoke the MiFID authorisation and management body change notification ITS; remove the MiFID management body reporting requirements; and to remove the Notified Persons reporting requirement? Question 15: Do you agree with our proposal to remove the Certification Regime? Question 16: Do you agree with our proposals on regulatory references for previously certified persons? Question 17: Do you agree with our proposal to remove the Directory? Question 18: If, following feedback, we decide not to completely remove the Certification Regime, regulatory references and the Directory, which features do you think we should retain? Please provide a rationale and evidence where possible. Question 19: Do you agree with our proposed changes to Conduct Rules training requirements? Question 20: Do you agree with our proposal to raise the breach reporting threshold for non-SMFs only subject to Individual Conduct Rules? Question 21: Do you agree with our proposals to improve the breach reporting form? Question 22: Do you agree with our proposals to change breach reporting timelines for non-SMFs? Question 23: Do you agree with our proposed guidance on non‑reportable Conduct Rule breaches? Question 24: Do you agree with our proposed consequential changes to the regulatory reference template? Question 25: Do you agree with our proposal to bring sole traders into scope of COCON? Question 26: Do you agree that implementation in H2 2027 would provide an appropriate implementation period following publication of the Policy Statement? Question 27: Do you agree with the assumptions set out in our Cost Benefit Analysis regarding existing compliance costs under the SM&CR and the expected reduction in those costs? Do you have any other comments on our Cost Benefit Analysis? Please provide supporting evidence, including quantified estimates where possible.

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Annex 2
Cost benefit analysis
Executive summary

The SM&CR requires firms to undertake a range of compliance activities. These include
applying for and managing Senior Manager Functions (SMF), identifying and assessing individuals under the Certification Regime, maintaining Directory entries, delivering Conduct Rules training, and assessing and reporting Conduct Rule breaches.
We estimate that these activities impose annual compliance costs of £434.5m across
the population of firms in scope. Our proposals will reduce annual SM&CR compliance costs by £229.0m, a reduction of around 53%.
The total quantified effect of the proposals in this consultation will reduce annual
compliance costs by £229.9m. The additional £0.9m is attributable to savings in Directory reporting costs to individuals who do not perform Certification Functions and are therefore outside the SM&CR regime.
The largest quantified annual saving, £133.0m, comes from removing the Certification
Regime. This reflects its large population and the recurring requirements to identify Certification Functions, assess fitness and propriety and undertake annual certification.
Replacing the existing Conduct Rules training requirement with a notification and
awareness requirement will save £56.8m while changing the threshold for Conduct Rule breach reporting will save £34.4m.
The SMR reforms provide a smaller quantified annual saving of approximately £4.8m.
The SMR applies to a smaller population of individuals and many of the changes affect Enhanced and dual-regulated firms only. These reforms may generate further benefits that we are not able to quantify, including greater flexibility in managing vacancies and reduced uncertainty and risk of delay in making senior appointments.
Firms will incur an estimated £61.7m of one-off transition costs. After accounting for
these costs and the timing of impacts, the package has an estimated ten-year net present value of £1.91bn and an annualised net benefit to business of £214.9m. The annualised net benefit differs from the recurring annual saving because it also reflects one-off transition costs and the timing of costs and benefits over the appraisal period.
The reforms involve accepting some additional risk because they reduce regulatory
scrutiny, information and preventative controls. We do, however, retain important safeguards, including approval for the most senior roles, firms’ responsibility for assessing Senior Managers as fit and proper, the Duty of Responsibility, the Conduct Rules and wider requirements concerning employee competence, suitability and conduct.

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Summary of quantified impacts
Social impact
Present
Value
Benefits
(£m)
Present
Value Costs
(£m)
Net Present
Value
(£m)
Total impact 1976.16 61.68 1914.48
-of which direct 1976.16 61.68 1914.48
-of which indirect
Business impact
10-year Present
Value (£m)
Equivalent Annualised
Net Direct Cost to
Business (£m)
Total net direct cost to business -1914.48 -214.89 Summary of impacts Impact type Benefit (£m) (incurred in all years) Costs (£m) (incurred in Year 1 only) Impacts on firms Familiarisation and gap analysis 8.38 Change programme costs 51.42 Removing SMF18 and 22, and narrowing the scope of SMF7 2.48 0.89 Changing thresholds for Enhanced firms 0.37 0.99 Moving some SMFs to notification 0.28 Changes to SoRs 0.91 Simplifying PRs 0.28 Changes to MRMs 0.47 Removing Certification Regime 133.04 Removing the Directory (non-Certified Function staff) 0.86 Changing thresholds for reporting Conduct Rule breaches 34.37 Changing requirements on Conduct Rules training 56.81 Total 229.86 61.68

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Analytical approach
Overview
9. Our quantified analysis focuses on the reduction in ongoing compliance costs for
firms, as these are the impacts most directly attributable to the proposals and can be estimated using available evidence. We assess other impacts, including effects on accountability, governance, conduct outcomes, risk rebalancing, competitiveness and growth, qualitatively.
10. Our approach is activity-based. We first estimate the baseline cost to firms of
undertaking key SM&CR compliance activities under the current regime, based on our firm survey. We then estimate how those activities would change under the proposed reforms. The difference between the baseline cost and the estimated post-reform cost provides our estimate of compliance cost savings.
11. For each activity, we estimate:

the unit cost of undertaking the activity
the frequency with which the activity takes place
the affected population of firms, individuals or roles
how these vary across firm size or SM&CR category.

We estimate unit costs using survey evidence on the staff time required to undertake
different compliance activities and the cost of that staff time (see “Data”). We estimate activity frequencies and affected populations using FCA data, for example the number of applications submitted for particular SMF roles across large, medium-sized and small firms. We aggregate these estimates across the relevant population to estimate baseline costs and the savings from our proposals. Scope of quantification
We have quantified impacts where the proposals change identifiable compliance
activities and we have evidence on their frequency, the affected population and the cost of undertaking them. This allows us to estimate the reduction in firms’ compliance costs and the one-off costs of implementing the reforms.
We quantify the costs of the following SM&CR compliance activities:

Senior Managers Regime: appointing and managing Senior Managers, including
fitness and propriety assessments, regulatory references, approval applications, SoRs, MRMs and SMF-related reporting and training.
Certification Regime: identifying Certification Functions, assessing fitness and
propriety, obtaining and providing regulatory references, and carrying out annual certification.

Directory: creating and updating entries for certified and other individuals included
in the Directory.
Conduct Rules: developing and delivering training, staff time spent undertaking
training, assessing potential breaches and reporting breaches to us.

Our estimates capture the additional costs imposed by the SM&CR. They exclude
costs firms would incur without the regime through activities such as recruitment, performance management and disciplinary processes. Unquantified impacts
Other impacts and potential savings arise through longer and less certain pathways.
For example, greater flexibility in senior appointments may affect recruitment and succession planning, while resources released from compliance activity may be retained, passed on to consumers or redirected towards investment, innovation or other activities. The resulting effects will depend on firms’ individual circumstances and behavioural responses, as well as wider labour market, regulatory and economic conditions.
We do not have sufficiently robust data or evidence to estimate these effects or isolate
the contribution of the reforms from other factors affecting recruitment, governance, competition, productivity and growth. Some outcomes, including the clarity of accountability, standards of conduct and the risk of consumer or market harm, are also difficult to observe and value reliably. Monetising them would require assumptions about behavioural responses and causal effects that are not supported by the available evidence and could give a misleading impression of precision. Data Compliance cost survey
Between April and July 2026, we undertook a data-gathering exercise through a firm
survey to estimate the existing SM&CR compliance costs. We sent a survey to 2,500 firms, after piloting with 142 firms and a selection of industry groups to ensure the questions were well understood and targeted on the most salient costs.
Firms were stratified by SM&CR category and size, with oversampling for smaller strata
to ensure responses across key groups. Firms were selected at random within these groups. Respondents were asked to estimate the time spent on different compliance activities by staff at different levels in the organisation. We received 260 responses.
In line with our Memorandum of Understanding with the Prudential Regulation Authority
and the terms set out in our survey, we shared the subset of survey responses that came from dual-regulated firms with the PRA. This data has been used to inform the CBA for the PRA’s SM&CR proposals. The unit cost estimates in the PRA’s CBA differ from ours as they relate to dual-regulated firms only.

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21. Our survey asked respondents to focus only on the incremental costs of regulation.
Some survey respondents told us it was difficult to separate the incremental cost of SM&CR requirements from related business activities. For example, fitness and propriety assessments and regulatory references can overlap with wider recruitment and screening processes. Though they provided their best estimates, there is a risk of measurement error, as some business-as-usual costs are included in estimates of SM&CR compliance costs. Internal data
22. We use internal FCA datasets, drawing on authorisation and approvals data and
regulatory returns, both to identify the population of firms and individuals in scope of the SM&CR, and to measure the level of compliance activity. We record data on relevant activities, such as applications for approval, updates to individual records or SoRs, the number of certified individuals and the number of Conduct Rule breaches reported to us.
23. We use internal data from 2022 to 2025 to allow us to smooth out year-to-year variation
in SM&CR‑related activities, such as applications for approval and submissions of SM&CR related forms. We use this data to estimate baseline activity levels and to model how activity levels would change under the proposed reforms.
24. We use data on employee numbers from Orbis combined with internal data on firm size
to estimate the number of staff in scope of Conduct Rules requirements. Limitations and uncertainty
25. Several factors cause uncertainty in our estimates. Whilst we have a high degree of
confidence in our frequency estimates that come from activity directly reported to us, our unit cost estimates were derived from survey data. This has the following limitations:

Measurement error outlined above due to the difficulty in survey respondents
attributing costs solely to SM&CR requirements.
Low response rate (around 10%) due to the complexity of the information required
in the survey. If firms that responded differ systematically in cost structure from firms that did not respond, there is a risk of response bias.
Variation in the underlying population due to different business sizes, sectors,
activities and business models.

To account for these limitations, we present a low, central and high estimate for
every unit cost component in our analysis. These are derived from quartiles in our survey responses:

25th percentile – low estimate
Median (50th percentile) – central estimate
75th percentile – high estimate

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27. We use the median as our central estimate because survey responses are skewed and
include some extreme values. The median reduces sensitivity to outliers. However, these ranges should not be interpreted as statistical confidence intervals. They show variation in observed responses and provide a proportionate way to reflect uncertainty in the cost evidence.
28. In line with our standard approach to CBA, we use three size groups – large, medium and
small. This allows us to provide a proportionate disaggregation of firm sizes given the granularity of data available to us. However, it does not fully capture the heterogeneity of firm cost structures.
29. The Orbis-based Conduct Rules population estimates define firm size by number
of employees. Our internal classification of firm size in our Standardised Cost Model (SCM), which we use to define our survey sample and frequency populations, uses a more nuanced categorisation based on fee categories. These size definitions do not directly overlap.
30. We present sensitivity analysis for specific estimates relating to Conduct Rules-specific
training and breach reporting which are particularly sensitive to certain parameters. Key assumptions
31. In line with our Statement of Policy on CBA (7.13 to 7.38) we have applied the following
standard assumptions in our analysis:

Appraisal period: 10 years, starting 2027-28
Discount rate: 3.5 per cent
Price base year: 2026-27 (current prices on publication of the consultation)
Present value base year: 2027-28 (the first year of the appraisal period)

We note that the government is reviewing its approach to discounting following the
recommendations in the Green Book Discount Rate Review, for example to reduce the discount rate to 3.0% for policies with lifetimes less than 30 years. We will consider our own approach to discounting in line with any decision made by the government. As a result, we may use a different discount rate when amending our estimates at the point of publishing any Policy Statement which follows from this consultation.
To monetise the cost of staff time in line with our Statement of Policy on CBA (9.8 to
9.12), we use estimates of wages from our Standardised Cost Model (see Appendix 1 of our Statement of Policy on CBA) and the Annual Survey of Hours and Earnings. To take account of non-wage labour costs, we uprate by 21.6%, in line with the approach used in the HMT Impact Assessment for the FSM Bill (7.14) and as defined in the Department for Business and Trade Impact Assessment for the National Minimum Wage (Amendment) Regulations 2026 (footnote 42).

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34. Our analysis also relies on the following assumptions:

Unit costs of compliance activities remain stable in real terms over the appraisal
period.
Activity frequencies observed between 2022 and 2025 are a good estimate of the
counterfactual level of activity in the absence of reform.
The opportunity cost of staff time is appropriately captured through wage-based
cost estimates as set out in our Standardised Cost Model.

Our quantified estimates relate to the savings from the removal of prescriptive
regulatory requirements. We therefore assume that firms realise an economic benefit equal to the full economic cost of any activity removed or streamlined.
We note that in some cases firms may continue to choose to undertake some of the
same or similar activities even in the absence of a regulatory requirement. To do so will be a business decision – the firm believes that the marginal benefit of undertaking an activity, for example in order to effectively screen and quality assure a senior hire, exceeds the marginal cost of doing so. We do not make any reduction in the assumed benefit to account for activities that firms may continue to do when no longer required by a regulation.
Our estimates of benefits therefore reflect the value of regulatory requirements avoided
rather than an unconditional prediction of firms’ realised cash or resource savings. Counterfactual
The counterfactual for this analysis is the SM&CR as it existed before the current
programme of legislative and regulatory reform. We estimate the costs of complying with the regime before the Phase 1 reforms. This provides a common baseline against which we assess the combined impacts of the Phase 1 and Phase 2 reforms and relevant legislative changes.
The Phase 1 reforms introduced through PS26/6: Senior Managers & Certification
Review had not been fully embedded by firms when we gathered evidence. To ensure that survey responses were prepared on a consistent basis, we asked firms to report their costs before any of the reforms were implemented.
Where relevant, we update in our “Benefits” section estimates from our CBA for the
Phase 1 reforms set out in CP25/21: Senior Managers & Certification Regime Review Consultation Paper using the new evidence gathered for this analysis. We explain in our assessment of benefits how we distinguish the impacts of the Phase 1 reforms from the additional impacts of the Phase 2 proposals.

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Relationship to legislative changes
41. Several of our policy proposals are dependent on legislative changes. The FSM Bill would
remove or amend several prescriptive statutory requirements and give the regulators greater discretion over the future design of the SM&CR. In these areas, the legislative changes enable but do not determine the resulting regulatory framework.
42. Our CBA assesses the full impacts from our resulting rule changes relative to the status
quo, whether or not the policy proposal was contingent on legislative change. Our assessment therefore differs from HMT’s 2026 Impact Assessment for the Financial Services and Markets Bill 2026, which was produced before the proposals in this consultation paper were set out.
43. Our CBA covers impacts from our rules on solo-regulated and dual-regulated firms.
The PRA’s CBA covers the impact of PRA rules on dual-regulated firms. Combining both CBAs gives an estimate of the total costs and benefits of both regulators’ proposals. Estimate of baseline compliance cost
44. We estimate the annual cost of each compliance activity using the following formula:
Total population cost of compliance activity = Unit cost x aggregate annual frequency
45. The unit cost is the cost to a firm each time it undertakes an activity. We estimate this
using the staff time required and the opportunity cost of that time. Aggregate annual frequency is the number of times the activity is undertaken across the affected firm population in a typical year.
46. Our central estimate of the activity-based baseline is £434.5m per year (Table
5). This represents the cost of identifiable SM&CR compliance activities that can be linked to individual regulatory requirements and modelled using unit costs and activity frequencies. We present low and high estimates to reflect variation in the unit cost evidence.
47. The largest costs arise from recurring requirements that apply across large populations.
These include Conduct Rules training and breach assessment, as well as annual fitness and propriety assessments and certification. SMR activities account for a smaller share of the baseline because they generally apply to fewer individuals.
48. Cost structures also differ across firms. Larger firms often have dedicated compliance,
legal and HR functions but more complex governance arrangements. Smaller firms generally have simpler structures but may rely more heavily on senior managers or business owners to undertake compliance activities directly.
49. Further detail on the activity-based baseline is set out in Tables 6a to 8b in Annex 3.
Table 7c provides a breakdown of Directory costs.

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Additional survey-reported overheads
50. Survey respondents also reported wider costs associated with maintaining SM&CR
systems, policies and documentation, and undertaking internal assurance. The central estimate of these costs is £153.2m a year.
51. We cannot reliably attribute these costs to individual requirements, determine how far
they overlap with the activity costs above, or estimate how they would change under the proposals. We therefore report them separately and exclude them from both the £434.5m activity-based baseline and our quantified savings.
52. The reforms may reduce some of these wider costs if firms simplify their internal
arrangements. However, we cannot estimate the scale or timing of any reduction robustly. We therefore assess this possible effect qualitatively rather than including it in our headline estimates.
Table 5: Total annual cost of SM&CR, baseline, £m
Low Central High
Senior Managers Regime 51.0 115.9 245.0
SMF appointments 7.3 12.7 23.2
Ongoing SMF management 43.7 103.2 221.8
Certification Regime 79.2 133.0 257.0
Certification Function appointments 54.7 93.5 165.6 Ongoing Certification Function management 24.6 39.6 91.5 Conduct Rules 102.4 185.6 432.6 Training 42.4 71.0 159.1 Investigating and reporting breaches 59.9 114.6 273.4 Total SM&CR activity-based baseline 232.6 434.5 934.7 Directory 5.1 8.4 16.4 Cert Fn staff (included in Ongoing Cert Fn management) 4.6 7.6 14.7 Non-Cert Fn staff 0.5 0.9 1.6 Low Central High Additional survey-reported SM&CR overheads (not included in baseline)
79.1 153.2 287.6

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Benefits
53. The following sections set out the benefits of our proposals to reform the Senior
Managers Regime, Certification Regime and Conduct Rules.
Senior Managers Regime
54. Some SMR proposals overlap. We therefore estimate them sequentially and adjust each
estimate for savings already attributed to earlier proposals. Removing Senior Manager Functions
55. Removing SMF18 and SMF22 will take around 1,400 individuals out of the SMF
population and reduce the number of future applications for approval. To estimate annual cost savings, we simulate the effect of removing SMF18 and SMF22 from our baseline data.
56. We exclude activities that relate only to SMF18 or SMF22. Where an activity (such as the
submission of a particular form) relates to an SMF18 or SMF22 and another SMF that is not being removed, we retain it in the frequency count.
57. We apply a similar approach to SMF7s although as we cannot exactly identify which
SMF7s would have remained in scope, we make a general assumption of a reduction in the SMF7 population of 40%.
58. We keep unit costs unchanged and apply them to the revised frequency estimates.
This isolates the reduction in compliance activity associated with removing SMF18 and SMF22 and reducing SMF7 by around 40%.
59. We estimate that removing SMF18 and SMF22 and narrowing the scope of SMF7 will
deliver annual cost savings of £1.35m to £4.77m, with a central estimate of £2.48m. Most of the saving comes from reduced appointment activity, with smaller savings from ongoing management activities such as annual fitness and propriety reassessments. Changing thresholds for Enhanced firms
60. Raising thresholds for firms to become subject to the Enhanced SM&CR regime will
result in some firms that would otherwise be classified as Enhanced being classified as Core. They will no longer be required to designate SMFs that apply only under the Enhanced regime, or to prepare and submit handover summaries or maintain MRMs. This will remove the associated costs of appointing and managing those functions.
61. We estimate the savings by applying the proposed thresholds to the firms and
compliance activities in our baseline data for 2022 to 2025. For firms that would have been classified as Core, we remove activities relating only to Enhanced-only firms.

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Separation of Phase 1 and Phase 2 impacts
62. Our Phase 1 reforms increased certain Enhanced firm thresholds to reflect inflation.
We estimate the effect of those changes separately by identifying firms reclassified as Core under the Phase 1 thresholds. We then apply the proposed Phase 2 thresholds to estimate the additional savings from firms that would be reclassified as Core under these proposals.
63. On this basis, we estimate that the Phase 1 threshold changes delivered annual savings
of £0.05m to £0.22m, with a central estimate of £0.11m. The proposed Phase 2 changes deliver additional annual savings of £0.14m to £0.50m, with a central estimate of £0.26m. Together, the Phase 1 and Phase 2 threshold changes deliver annual savings of £0.20m to £0.72m, with a central estimate of £0.37m. Moving some Senior Manager Functions to notification
64. We estimate the saving from moving certain SMFs to notification by recalculating
approval application frequencies after removing appointments that would no longer require approval.
65. We remove the costs associated with Long Form A (including the associated fee), Short
Form A and Form E approval applications for affected cases and replace them with the estimated cost of notification.
66. We proxy for the cost of notification by assuming it is 30% of the cost of a Short Form
A application, reflecting our expectation that firms will need to provide less information than under the approval process.
67. We estimate that moving these roles to notification will deliver annual cost savings
of £0.17m to £0.48m, with a central estimate of £0.28m. The savings arise from removing approval application requirements, partially offset by the cost of submitting notifications.
68. In addition to the quantified saving, firms using notification will benefit from not having
to wait for approval. Notification may give firms greater certainty over the timing of appointments and make recruitment, succession planning and internal moves easier to manage. Feedback from firms suggests that, whilst unquantified, the value of these savings would be significant. Changes to Statements of Responsibilities
69. We estimate the saving from our proposed changes to SoRs using the baseline
frequency and cost of reporting changes in responsibilities through Form J.
70. We assume that firms with more than one individual performing an SMF will still incur the
cost of reallocating responsibilities at the point of a change in responsibilities, as they will be required to update and maintain their SoRs where relevant. However, they will no longer incur the cost of reporting changes.

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71. For single-SMF firms, we remove both the cost of reporting changes through Form J
and the associated cost of reallocating responsibilities. This reflects that these firms will no longer need to maintain or report a SoR.
72. We estimate that removing Form J reporting will deliver annual cost savings of £0.53m
to £1.64m, with a central estimate of £0.89m. Removing the requirement to maintain SoRs in single-SMF firms will deliver additional annual savings of £0.01m to £0.04m, with a central estimate of £0.02m.
73. Taken together, we estimate that the proposals relating to SoRs will deliver annual cost
savings of £0.54m to £1.68m, with a central estimate of £0.91m. Simplifying Prescribed Responsibilities
74. On the basis of a review of the total number of responsibilities and their distribution
across firms, we assume a reduction of around 15% in the frequency of reallocations of responsibilities. This will deliver annual cost savings of £0.15m to £0.48m, with a central estimate of £0.28m. Management Responsibilities Maps (MRM)
75. We estimate the saving from removing requirements to routinely provide MRM updates
using the baseline frequency and unit cost of updating them. On this basis, we estimate this will deliver annual cost savings of £0.28m to £0.99m, with a central estimate of £0.47m. Extending the temporary cover rule from 12 to 18 weeks
76. We have not quantified the benefit of extending temporary cover because its effect
depends on individual recruitment and succession circumstances rather than removing an identifiable recurring compliance activity. Whilst unquantified, this is an issue of significant importance to firms. Certification Regime Removing the Certification Regime
77. We assume that the benefits from removing the Certification Regime are equal to the
baseline costs attributable to the regime. We estimate therefore that this will deliver annual cost savings of £79.25m to £257.04m, with a central estimate of £133.04m. Separation of Phase 1 and Phase 2 impacts
78. We attribute £16.09m of this to proposals implemented through our Phase 1 reforms,
and the remaining £116.94m to the complete removal we propose in Phase 2.

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79. Our Phase 1 reforms, set out in PS26/6, removed the need for individuals who were
already certified to obtain separate certification for certain functions. When we gathered evidence for our baseline, these Phase 1 reforms had not been fully embedded by firms. Their impact is therefore not reflected in the baseline estimate.
80. We estimated in our CBA for the Phase 1 proposals that this change would reduce
relevant Certification Regime costs in Enhanced, Core and Dual-regulated firms by 15%. We apply that assumption to our updated baseline data to distinguish the savings attributable to the Phase 1 reforms from the additional savings attributable to removing the Certification Regime.
81. To do this, we estimate the baseline cost for Enhanced, Core and Dual-regulated firms
by removing Limited Scope firms from the frequency and population estimates and apply a 15% reduction. This gives Phase 1 savings of £9.43m to £32.82m, with a central estimate of £16.09m.
82. After deducting these Phase 1 savings, we estimate that removing the regime
altogether will deliver additional annual savings of £69.82m to £224.23m, with a central estimate of £116.94m. This represents the savings attributable to the Phase 2 proposal to remove the Certification Regime, after accounting for the effect of the Phase 1 reforms. Removing the Directory
83. Removing the Directory will eliminate the need for firms to create, update and attest to
the accuracy of Directory entries. We assume that the total savings from removing the Directory are equal to its baseline costs of between £5.11m and £16.36m, with a central estimate of £8.43m.
84. Most Directory costs (between £4.56m and £14.73m, with a central estimate of £7.56m)
relate to Certification Function holders. We have included these savings in our estimate for removing the Certification Regime, as the associated Directory-related costs would fall away regardless of any decision on the Directory.
85. To avoid double counting, we only add on the remaining Directory costs associated with
individuals who do not perform Certification Functions. On that basis, we estimate that removing the Directory will deliver additional annual cost savings of £0.55m to £1.63m, with a central estimate of £0.86m, over and above savings already attributed to the removal of the Certification Regime.

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Conduct Rules
Conduct Rules training – notification and awareness
86. We expect that our proposed changes to Conduct Rules training requirements will
reduce the cost of developing and maintaining Conduct Rules-specific training. Firms will no longer need to maintain separate or bespoke Conduct Rules training where they can properly inform relevant individuals through simpler communications or by integrating Conduct Rules content into existing processes. We therefore assume an 80% reduction in the baseline cost of developing and maintaining Conduct Rules‑specific training.
87. We also expect the proposal to reduce the staff time spent attending Conduct
Rules‑specific training. Where firms replace standalone Conduct Rules training with shorter notifications or integrate the content into wider training already provided to staff, the incremental time spent on Conduct Rules-specific training should fall significantly. We therefore assume an 80% reduction in the baseline staff time cost associated with attending Conduct Rules training.
88. The scale of savings will depend on how firms respond to the new rule. Some firms
may continue to provide standalone Conduct Rules training where they consider this appropriate. We therefore treat the 80% reductions as behavioural assumptions and test the sensitivity of the estimates.
89. On that basis, we estimate that revising Conduct Rules training requirements will deliver
annual cost savings of £34.0m to £127.31m, with a central estimate of £56.81m. The savings arise from reduced costs of developing and maintaining Conduct Rules-specific training and reduced staff time spent attending that training.
90. Table 10a in Annex 3 sets out the results of two-way sensitivity analysis on our
central estimates under alternative assumptions of the percentage reduction in developing and maintaining Conduct Rules-specific training and the cost of staff time attending training. Raising the threshold for Conduct Rule breach reporting
91. Analysis of internal breach reporting data suggests that around 30% of currently
reported breaches would no longer be reportable under the proposed new threshold. We expect this to have two effects on firm compliance activity.
92. First, it will reduce the number of Conduct Rules-specific breach assessments that
firms undertake. This reflects the proposed guidance that firms would not need to take additional steps to determine whether a Conduct Rule breach has occurred where the disciplinary outcome does not meet the proposed reporting threshold.
93. Second, it will reduce the number of reportable incidents that firms would need to
include in their Conduct Rule breach reporting, which reduces the cost of preparing and submitting REP008 reports.

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94. We have assumed that raising the threshold will lead to a 30% reduction in each of
these activities. Therefore, we assume a 30% reduction in the number of Conduct Rules-specific breach assessments and a 30% reduction in the average cost of REP008 reporting.
95. We assume that the unit cost of investigating whether the Conduct Rules have been
breached remains unchanged.
96. On that basis, we estimate that raising the Conduct Rule breach reporting threshold will
deliver annual cost savings of £17.97m to £82.03m, with a central estimate of £34.37m. The savings arise mainly from fewer Conduct Rules-specific breach assessments, with a smaller saving from reduced reporting costs.
97. Table 10b in Annex 3 sets out the results of two-way sensitivity analysis on our central
estimates under alternative assumptions of the percentage reduction in Conduct Rules‑specific breach investigations and the cost of a report. Bringing sole traders into scope of the Conduct Rules
98. The proposal to apply the Conduct Rules to around 1,000 sole traders will create
a more consistent individual conduct framework across financial services without introducing new standards of behaviour. We do not expect that this will have a significant cost impact.
99. Sole traders are already subject to the Principles for Businesses, which set broadly
similar standards for firms. They are also required to train relevant employees on the Conduct Rules and report breaches to the regulator(s). We do not anticipate that bringing sole traders into scope will lead to significant additional investigatory or Conduct Rule breach reporting activity. Other reporting changes
100. Our other proposals to streamline reporting requirements may lead to a small reduction
in administrative costs for in-scope firms. These include our proposals to:

Revoke the MiFID authorisation and management body change notification
ITS and remove the associated management body reporting requirements for solo‑regulated firms.
Remove the requirement in SUP 15.4 for overseas firms to report details of persons.

We have not quantified these as the costs of obtaining relevant information from firms
would not be justified by the potential scale of impact. We expect the costs of the MiFID ITS proposal to be of minimal significance, as we are removing existing reporting requirements without imposing replacement ones. This means we are not required to produce a separate CBA (section 138L(3) FSMA). The cost impact of removing reporting requirements under SUP 15.4 is also expected to be minimal.

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Costs
102. The proposals will reduce firms’ ongoing compliance costs but create some one-off
transition costs. Firms will need to understand the new requirements, assess their existing arrangements and make any necessary changes. Familiarisation costs
103. Firms will incur one-off costs to familiarise themselves with the changes and assess the
implications for their governance arrangements, policies and procedures.
104. We estimate these familiarisation and gap analysis costs using the SCM set out in our
Statement of Policy on CBA (p 75 to 77). This includes time spent by compliance and legal staff reviewing the new rules and assessing their implications.
105. We estimate total familiarisation and gap analysis costs of £8.38m, incurred in the first
year of implementation.
Implementation and change costs
106. Some firms will also incur costs when changing their internal processes, controls and
governance arrangements. This may include updating policies, procedures, governance documents, reporting processes, training materials and systems used to support SM&CR compliance.
107. For example, firms may need to review how they assess the competence and suitability
of individuals who would previously have been certified. They may also need to change their Conduct Rules processes or how they allocate responsibilities under the Senior Managers Regime.
108. We estimate these change programme costs using the SCM set out in our Statement
of Policy on CBA (p 79). The estimate reflects the staff time needed to manage and implement changes to firms’ internal arrangements, including project team and project management time.
109. We estimate total one-off change programme costs of approximately £51.42m,
incurred in the first year. These costs are separate from familiarisation and gap analysis costs because they relate to implementing changes rather than understanding the new requirements. Responsibility reallocation costs
110. Removing SMF18 and SMF22 and narrowing the scope of SMF7 will require firms to
reallocate responsibilities to other Senior Managers. We assume that firms incur a one-off reallocation cost for each affected SMF role. We estimate this cost at between £0.48m and £1.59m, with a central estimate of £0.89m.

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111. Some firms will also move from Enhanced to Core status and will no longer be required
to designate Enhanced-only SMFs. We estimate the resulting responsibility reallocation costs at between £0.53m and £1.75m, with a central estimate of £0.99m.
112. Both costs are incurred in the first year of implementation.
Risk rebalancing
113. The proposals may increase some risks that cannot be robustly monetised. Under
the SMR, moving specified functions from approval to notification and simplifying responsibilities requirements will reduce regulatory scrutiny.
114. Removing the Certification Regime will remove the structured requirements for firms
to identify Certification Functions, undertake formal fitness and propriety assessments and certify individuals annually.
115. Changes to the Conduct Rules requirements may also reduce staff awareness and the
information available to us about lower-level conduct issues.
116. However, important safeguards will remain. Firms will continue to assess Senior
Managers as fit and proper, the most senior roles will remain subject to approval, and Senior Managers will remain subject to the Duty of Responsibility and Conduct Rules.
117. Firms will also remain subject to wider requirements concerning employee competence,
suitability, qualifications and conduct, and serious matters will remain reportable. The scale of any resulting effect on accountability, conduct, consumers or market integrity is uncertain and cannot be estimated robustly. Consultation with the CBA Panel
118. We consulted the CBA Panel on an earlier version of this analysis and consultation paper.
Following its advice, we clarified the relationship between legislative changes and our regulatory policy choices and explained more clearly the limits of the quantified analysis and the potential unquantified risks. Question 27: Do you agree with the assumptions set out in our Cost Benefit Analysis regarding existing compliance costs under the SM&CR and the expected reduction in those costs? Do you have any other comments on our Cost Benefit Analysis? Please provide supporting evidence, including quantified estimates where possible.

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Annex 3
Analytical tables
Estimates generated from firm survey
Table 6a: Unit costs (£), Senior Managers Regime, baseline
Large Medium Small
Low Central High Low Central High Low Central High SMF appointment Conducting fit and proper test 425 731 1,171 378 700 1,439 291 443 944 Creating handover plan 432 733 1,540 290 486 860 282 350 524 Submitting handover summary 75 183 489 89 282 463 117 238 424 Applying for approval: Long Form A 969 1,394 2,261 670 1,070 2,052 583 1,063 1,475 Applying for approval: Short Form A 419 778 1,346 246 498 772 170 354 728 Applying for approval: Form E 234 603 1,117 160 271 540 133 184 379 Obtaining regulatory reference 105 170 309 79 151 331 74 144 359 Providing regulatory reference 109 145 280 67 128 253 83 129 216 Ongoing SMF management Reallocation of responsibilities 327 533 1,061 249 523 870 191 340 539 Reporting changes in responsibilities 167 227 404 136 249 500 105 187 303 Management Responsibilities Maps 205 327 624 182 310 719 179 298 376 Annual fitness & propriety reassessments 349 604 1,446 249 468 1,085 227 408 969 Reporting cessation of SMF 109 169 290 109 237 408 71 184 333 Reporting changes in circumstances 113 209 442 126 265 486 123 208 361 Developing/maintaining SMF-specific training 861 2,009 5,713 546 1,532 3,940 388 977 3,167 Attending SMF-specific training 1,187 2,374 4,639 1,088 2,175 3,915 465 1,322 1,662

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Table 6b: Total annual costs (£), Senior Managers Regime, baseline
Large Medium Small
Low Central High Low Central High Low Central High SMF appointment Conducting fit and proper test 298,000 512,000 820,000 733,000 1,358,000 2,791,000 1,232,000 1,876,000 3,997,000 Creating handover plan 200,000 339,000 712,000 266,000 446,000 790,000 76,000 94,000 141,000 Submitting handover summary 35,000 85,000 226,000 82,000 259,000 426,000 31,000 64,000 114,000 Applying for approval: Long Form A 268,000 433,000 770,000 438,000 888,000 1,992,000 796,000 2,056,000 3,140,000 Applying for approval: Short Form A 104,000 193,000 334,000 175,000 355,000 550,000 259,000 539,000 1,109,000 Applying for approval: Form E 15,000 38,000 71,000 16,000 28,000 55,000 11,000 15,000 32,000 Obtaining regulatory reference 73,000 119,000 217,000 153,000 294,000 642,000 315,000 611,000 1,519,000 Providing regulatory reference 76,000 102,000 196,000 130,000 248,000 492,000 352,000 545,000 913,000 Ongoing SMF management Reallocation of responsibilities 313,000 509,000 1,015,000 462,000 969,000 1,613,000 263,000 467,000 739,000 Reporting changes in responsibilities 160,000 217,000 386,000 337,000 575,000 1,333,000 144,000 257,000 416,000 Management Responsibilities Maps 187,000 299,000 569,000 358,000 612,000 1,418,000 73,000 122,000 154,000 Annual fitness & propriety reassessments 672,000 1,163,000 2,782,000 1,657,000 3,112,000 7,217,000 9,880,000 17,760,000 42,167,000 Reporting cessation of SMF 67,000 103,000 178,000 191,000 415,000 717,000 298,000 765,000 1,386,000 Reporting changes in circumstances 7,000 14,000 29,000 24,000 50,000 91,000 26,000 44,000 76,000 Developing/maintaining SMF-specific training 205,000 478,000 1,360,000 867,000 2,433,000 6,257,000 11,624,000 29,263,000 94,850,000 Attending SMF-specific training 282,000 565,000 1,104,000 1,727,000 3,454,000 6,218,000 13,913,000 39,600,000 49,767,000

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Table 7a: Unit costs (£), Certification Regime, baseline
Large Medium Small
Low Central High Low Central High Low Central High Certification Function appointment Assessing whether a role is a Certification Function 145 253 398 116 237 593 132 223 358 Conducting fit and proper test 274 478 793 268 390 653 175 317 618 Obtaining regulatory reference 105 170 309 79 151 331 74 144 359 Providing regulatory reference 109 145 280 67 128 253 83 129 216 Ongoing Certification Function management Annual recertification 258 468 1,238 229 351 960 179 259 439 Creating new Directory entry 70 75 113 35 70 195 58 85 171 Updating existing Directory entry 38 70 110 35 67 134 29 70 134

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Table 7b: Total annual costs (£), Certification Regime, baseline
Large Medium Small
Low Central High Low Central High Low Central High Certification Function appointment Assessing whether a role is a Certification Function 3,859,000 6,728,000 10,586,000 4,177,000 8,504,000 21,292,000 27,357,000 46,176,000 74,126,000 Conducting fit and proper test 4,300,000 7,492,000 12,425,000 4,130,000 5,994,000 10,040,000 2,767,000 5,015,000 9,788,000 Obtaining regulatory reference 1,640,000 2,666,000 4,847,000 1,212,000 2,330,000 5,089,000 1,179,000 2,284,000 5,681,000 Providing regulatory reference 1,705,000 2,274,000 4,394,000 1,032,000 1,969,000 3,899,000 1,318,000 2,039,000 3,414,000 Ongoing Certification Function management Annual recertification 6,646,000 12,034,000 31,838,000 6,907,000 10,616,000 29,030,000 6,459,000 9,354,000 15,862,000 Creating new Directory entry 1,143,000 1,235,000 1,852,000 568,000 1,136,000 3,152,000 974,000 1,430,000 2,884,000 Updating existing Directory entry 786,000 1,455,000 2,300,000 627,000 1,199,000 2,399,000 461,000 1,109,000 2,143,000

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Table 7c: Total annual costs (£), Directory, baseline
Note the unit costs for Directory entries are contained in Table 7a Large Medium Small Low Central High Low Central High Low Central High Certification Function staff Creating new Directory entry 1,143,000 1,235,000 1,852,000 568,000 1,136,000 3,152,000 974,000 1,430,000 2,884,000 Updating existing Directory entry 786,000 1,455,000 2,300,000 627,000 1,199,000 2,399,000 461,000 1,109,000 2,143,000 Non-Certification Function staff Creating new Directory entry 182,000 197,000 295,000 53,000 106,000 293,000 110,000 161,000 325,000 Updating existing Directory entry 105,000 195,000 307,000 47,000 90,000 181,000 48,000 116,000 225,000
Table 8a: Unit costs (£), Conduct Rules, baseline
Large Medium Small
Low Central High Low Central High Low Central High Conduct rules Developing/ maintaining Conduct Rules training 794 2,031 5,954 332 1,123 3,047 304 636 2,211 Staff attending Conduct Rules training 61,881 61,881 123,763 4,927 9,853 14,780 248 496 744 Investigating whether Conduct Rules have been breached 350 558 1,840 245 748 1,617 414 749 1,753 Reporting Conduct Rule breach 186 323 564 91 150 448 55 111 380

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Table 8b: Total annual costs (£), Conduct Rules, baseline
Large Medium Small
Low Central High Low Central High Low Central High Conduct rules Developing/ maintaining Conduct Rules training 201,000 514,000 1,506,000 515,000 1,741,000 4,723,000 10,152,000 21,255,000 73,827,000 Staff attending Conduct Rules training 15,656,000 15,656,000 31,312,000 7,636,000 15,272,000 22,909,000 8,286,000 16,571,000 24,857,000 Investigating whether Conduct Rules have been breached 2,536,000 4,047,000 13,347,000 5,094,000 15,591,000 33,688,000 50,252,000 90,916,000 212,872,000 Reporting Conduct Rule breach 47,000 82,000 143,000 141,000 232,000 695,000 1,843,000 3,694,000 12,690,000
Table 9a: Unit costs (£), additional survey-reported SM&CR overheads, not included in baseline
Large Medium Small
Low Central High Low Central High Low Central High Additional survey-reported SM&CR overheads 10,000 41,484 82,750 7,500 15,572 32,460 1,950 3,563 6,500
Table 9b: Total annual costs (£), additional survey-reported SM&CR overheads, not included in baseline
Large Medium Small
Low Central High Low Central High Low Central High Additional survey-reported SM&CR overheads 2,530,000 10,495,000 20,936,000 11,625,000 24,136,000 50,313,000 64,914,000 118,592,000 216,379,000

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Sensitivity analysis
Table 10a: Sensitivity analysis of Conduct Rules training – notification and awareness,
£m, central estimates under alternative assumptions Reduction in cost of developing and maintaining Conduct Rules training 50% 60% 70% 80% 90% Reduction in staff time attending Conduct Rules training 50% 35.5 37.9 40.2 42.6 44.9 60% 40.3 42.6 45.0 47.3 49.7 70% 45.0 47.4 49.7 52.1 54.4 80% 49.8 52.1 54.5 56.8 59.2 90% 54.5 56.9 59.2 61.6 63.9
Table 10b: Sensitivity analysis of raising the threshold on Conduct Rule breach
reporting, £m, central estimates under alternative assumptions Reduction in cost of reporting Conduct Rule breach (REP008) 10% 15% 20% 25% 30% Reduction in number of Conduct Rule breach investigations 10% 11.5 11.7 11.9 12.1 12.3 15% 17.0 17.2 17.4 17.6 17.8 20% 22.5 22.7 22.9 23.1 23.3 25% 28.0 28.2 28.4 28.6 28.8 30% 33.6 33.8 34.0 34.2 34.4

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Annex 4
Compatibility statement
Compliance with legal requirements

This Annex records the FCA’s compliance with a number of legal requirements
applicable to the proposals in this consultation, including an explanation of the FCA’s reasons for concluding that our proposals in this consultation are compatible with certain requirements under the Financial Services and Markets Act 2000 (FSMA).
When consulting on new rules, the FCA is required by section 138I(2)(d) FSMA to explain
why we believe that making the proposed rules is compatible with our general duty, under section 1B(1) FSMA, (a) so far as reasonably possible, to act in a way which is compatible with our strategic objective and advances one or more of our operational objectives, (b) so far as reasonably possible, advances the secondary international competitiveness and growth objective, under section 1B(4A) FSMA, and (c) complies with our general duty under section 1B(5)(a) FSMA to have regard to the regulatory principles in section 3B FSMA. The FCA is also required by section 138K(2) FSMA to state its opinion on whether the proposed rules will have a significantly different impact on mutual societies as opposed to other authorised persons.
This Annex also sets out the FCA’s view of how the proposed rules are compatible with
the duty on the FCA to discharge its general functions (which include rule-making) in a way which promotes effective competition in the interests of consumers (section 1B(4)). This duty applies in so far as promoting competition is compatible with advancing the FCA’s consumer protection and/or integrity objectives.
In addition, this Annex explains how we have considered the recommendations made
by the Treasury under section 1JA FSMA about aspects of the economic policy of His Majesty’s Government to which we should have regard in connection with our general duties.
This Annex includes our assessment of the equality and diversity implications of
these proposals.
Under the Legislative and Regulatory Reform Act 2006 (LRRA) the FCA is subject to
requirements to have regard to a number of high-level ‘Principles’ in the exercise of some of our regulatory functions and to have regard to a ‘Regulators’ Code’ when determining general policies and principles and giving general guidance (but not when exercising other legislative functions like making rules). This Annex sets out how we have complied with requirements under the LRRA.

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The FCA’s objectives and regulatory principles: Compatibility statement
7. We consider the proposals are compatible with the FCA’s strategic objective of ensuring
that the relevant markets function well. The SM&CR furthers our primary operational objectives by supporting high standards of individual accountability and conduct, which helps protect consumers and strengthen market integrity. Our proposals seek to maintain those outcomes while making the regime more efficient and proportionate. By improving and clarifying our rules and expectations and removing or streamlining requirements where they impose disproportionate costs or burdens, we consider the proposals would support more consistent compliance, better consumer outcomes and market integrity.
8. We consider these proposals also advance the FCA’s secondary objective to advance
international competitiveness and growth. We consider our proposals to reduce costs and improve efficiency could increase the attractiveness of the UK as a place to invest and do business, both within the UK and for financial services workers globally, which can help facilitate the medium to long-term growth and international competitiveness of the UK economy.
9. In preparing the proposals set out in this consultation, the FCA has had regard to the
regulatory principles required of us by section 3B FSMA, as set out below. The need to use our resources in the most efficient and economic way
10. We consider that the proposed measures in this consultation are a proportionate use
of our resources. The updated rules and guidance should help firms and individuals to better understand their obligations under the SM&CR. This should help the FCA use its resources more efficiently and economically by reducing the amount of time spent resolving issues stemming from the application of the SM&CR. This includes, for example, answering firm queries and processing poor quality or unnecessary Senior Manager applications. The principle that a burden or restriction should be proportionate to the benefits
11. We consider our proposals to be proportionate to the benefits. Our assessment of the
costs and benefits of these proposals is set out in Annex 2. The need to contribute towards achieving compliance by the Secretary of State with section 1 of the Climate Change Act 2008 (UK net zero emissions target) and section 5 of the Environment Act 2021 (environmental targets)
12. In developing these proposals, we have considered our duty under these Acts. Overall,
we do not consider our proposals will have an impact on these targets.

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The general principle that consumers should take responsibility for their decisions
13. We do not consider our proposals to have an effect on this.
The responsibilities of senior management in relation to compliance with requirements imposed under FSMA, especially where they relate to consumers
14. Many of the proposals set out in this consultation are focused on the obligations of
Senior Managers under the SM&CR. Our proposals, set out in more detail in Chapters 1-5, are designed to maintain Senior Managers’ accountability while realising efficiencies for firms in administering the SM&CR. The desirability of exercising our functions in a way that recognises the differences in the nature of – and objectives of – businesses carried on by different persons including mutual societies and other kinds of business organisation
15. Our approach to proportionality is set out in Chapters 3-5, which explain the scope,
thresholds, and examples of application.
The desirability of publishing information relating to persons subject to requirements imposed under FSMA, or requiring them to publish information to advance our objectives
16. Our proposals aim to streamline, or remove, information published on the Register.
Chapter 4 explains the trade-offs associated with our proposals to change the
information published on our Register.
The principle that we should exercise our functions as transparently as possible
17. This CP sets out our policy justification for these proposals, the CBA and their
compatibility with our legal duties. The consultation is open for 3 months and we welcome responses from all stakeholders. We will consider all responses before deciding whether to proceed with making rules, and whether to do so in the form proposed in this consultation. This is subject to the approval of the FCA Board. In formulating these proposals, the FCA has had regard to the importance of taking action intended to minimise the extent to which it is possible for a business carried on (i) by an authorised person or a recognised investment exchange; or (ii) in contravention of the general prohibition, to be used for a purpose connected with financial crime (as required by section 1B(5)(b) FSMA).
18. We do not consider our proposals to be relevant in this regard.

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Treasury recommendations about economic policy
19. The proposals in this consultation are consistent with the recommendations made
by the Treasury in the November 2024 remit letter (under section 1JA of FSMA). In particular, they support the international competitiveness and growth of the UK financial services sector by improving the efficiency and proportionality of the regime, reducing burdens on firms while maintaining high standards of individual accountability and conduct. Expected effect on mutual societies
20. We propose to discontinue the option for credit unions to submit conduct breach reports
in hard copy. This change would streamline reporting and improve operational efficiency. Alternative formats would remain available where required to meet accessibility needs. Compatibility with the duty to promote effective competition in the interests of consumers
21. In preparing the proposals as set out in this consultation, we have had regard to the
FCA’s duty to promote effective competition in the interests of consumers. Compatibility with the requirement to detail engagement with statutory panels
22. We spoke to the FCA’s Practitioner Panel, Smaller Business Practitioner Panel and
Financial Services Consumer Panel about these proposals.
Equality and diversity
23. As a public authority, we are subject to the Public Sector Equality Duty under the
Equality Act 2010. This requires us, when exercising our functions, to have due regard to the need to eliminate discrimination, harassment, victimisation and other prohibited conduct, advance equality of opportunity, and foster good relations between people who share a protected characteristic and those who do not.
24. As part of this, we ensure the equality and diversity implications of any new policy
proposals are considered. The outcome of our consideration in relation to these matters in this case is that, overall, we do not consider that the proposals would have a material impact on groups sharing protected characteristics under the Equality Act
2010. (The Equality Act 2010 does not extend to Northern Ireland, where separate
anti‑discrimination legislation applies.) We will continue to consider the equality and diversity implications of the proposals during the consultation period and will revisit them when making the final rules.

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Environmental, social & governance considerations
25. In developing this CP, we have considered the environmental, social and governance
(ESG) implications of our proposals and our duty under sections 1B(5)(a) and 3B(1)(c) of FSMA to have regard to contributing towards the Secretary of State’s achieving compliance with the net-zero emissions target under section 1 of the Climate Change Act 2008 and environmental targets under section 5 of the Environment Act 2021. Overall, we do not consider that the proposals are relevant to contributing to those targets. We will keep this issue under review during the course of the consultation period and when considering whether to make the final rules.
26. In the meantime, we welcome feedback on this issue.
Legislative and Regulatory Reform Act 2006 (LRRA)
27. We have had regard to the principles in the LRRA for the parts of the proposals that
consist of general policies, principles or guidance and consider them to be:

transparent – we are consulting on our proposed changes
accountable – stakeholders will have an opportunity to provide feedback on our
proposals, and we will consider all evidence received prior to finalising the rules and guidance
proportionate – we consider our proposals will result in a more proportionate regime
for firms
consistent – the proposed changes to our guidance will help clarify our expectations
of firms, resulting in a more consistent application of the requirements
targeted only at cases in which action is needed – we consider that these proposals
are needed given the evidence from some firms set out in our CBA.

We have had regard to the Regulators’ Code for the parts of the proposals that consist
of general policies, principles or guidance and consider that they are consistent with the principles of the Regulators’ Code.

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Annex 5
Abbreviations used in this paper
Abbreviation Description
App Appendix
CBA Cost Benefit Analysis
CASS Client Assets Sourcebook
Cert Fn Certification function
COCON Code of Conduct Sourcebook
CP Consultation Paper
DP Discussion Paper
EU European Union
FCA Financial Conduct Authority
F&P Fitness & Propriety
FIT Fit and Proper test for Employees and Senior Personnel Sourcebook FS Financial Services FSM Financial Services and Markets FSMA Financial Services and Markets Act 2000 HMT His Majesty’s Treasury ITS Implementing Technical Standards LRRA Legislative and Regulatory Reform Act 2006 MiFID Markets in Financial Instruments Directive MLR Money Laundering Regulations MRM Management Responsibilities Map

73
Abbreviation Description
PRA Prudential Regulation Authority
PR Prescribed Responsibility
PS Policy Statement
SM&CR Senior Managers and Certification Regime SMF Senior Management Function SMR Senior Managers Regime SoR Statement of Responsibilities SPS Statement of Professional Standing SCM Standardised Cost Model SUP Supervision Sourcebook SYSC Senior Management Arrangements, Systems and Controls Sourcebook TC Training and Competence Sourcebook

Appendix 1
Draft Handbook text

FCA 202X/YY
INDIVIDUAL ACCOUNTABILITY (SMCR REVIEW PHASE 2) INSTRUMENT 2027 Powers exercised A. The Financial Conduct Authority (“the FCA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 55U (Applications under this Part); (2) section 59 (Approval and notification for particular arrangements); (3) section 59AB(1) (Specifying functions as controlled functions: transitional provision); (4) section 60 (Applications for approval); (5) section 60ZA (Notifications under section 59); (6) section 60A (Vetting of candidates by authorised persons); (7) section 63ZA (Variation of senior manager’s approval at request of authorised person); (8) section 63ZD (Statement of policy relating to conditional approval and variation); (9) section 63C (Statement of policy); (10) section 64A (Rules of conduct); (11) section 69 (Statement of policy); (12) section 137A (The FCA’s general rules); (13) section 137T (General supplementary powers); (14) section 138D (Actions for damages); (15) section 139A (Power of the FCA to give guidance); (16) section 316 (Direction by a regulator); (17) section 347 (The record of authorised persons etc.); (18) section 395 (The FCA’s and PRA’s procedures); and (19) paragraph 23 (Fees) of Part 3 (Penalties and fees) of Schedule 1ZA (The Financial Conduct Authority). B. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule-making instruments) of the Act. Commencement
C. This instrument comes into force on [date 1] except for Part 2 of Annex P, which comes
into force on [date 2].
Amendments to the Handbook
D. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes to this instrument listed in column (2).

FCA 202X/YY
(1) (2)
Glossary of definitions Annex A
Senior Management Arrangements, Systems and Controls sourcebook (SYSC)
Annex B
Code of Conduct sourcebook (COCON) Annex C Threshold Conditions sourcebook (COND) Annex D Fit and Proper test for Employees and Senior Personnel sourcebook (FIT)
Annex E
Training and Competence sourcebook (TC) Annex F General Provisions sourcebook (GEN) Annex G Fees manual (FEES) Annex H Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU)
Annex I
Conduct of Business sourcebook (COBS) Annex J Insurance: Conduct of Business sourcebook (ICOBS) Annex K Claims Management: Conduct of Business sourcebook (CMCOB) Annex L Funeral Plan: Conduct of Business sourcebook (FPCOB) Annex M Pensions Dashboards: Conduct of Business sourcebook (PDCOB) Annex N Client Assets sourcebook (CASS) Annex O Supervision manual (SUP) Annex P Decision Procedure and Penalties manual (DEPP) Annex Q Consumer Redress Schemes sourcebook (CONRED) Annex R Collective Investment Schemes sourcebook (COLL) Annex S Credit Unions sourcebook (CREDS) Annex T Consumer Credit sourcebook (CONC) Annex U Professional Firms sourcebook (PROF) Annex V [Editor’s notes:
(1) This consultation does not include draft amendments to the approved persons regime for appointed representatives or the parts of the SMCR requirements that cover appointed representatives. This is because such amendments may overlap with the Handbook amendments required to implement the changes in the Bill relating to those topics. They are therefore best dealt with in a separate FCA consultation on those topics. If changes to the Handbook provisions about those topics are not made or come into force at a later date, the FCA will, as appropriate, make the necessary amendments to the Handbook about appointed representatives consequent upon the changes being consulted on in this Consultation Paper. (2) For the sake of clarity, this draft is prepared on the basis that the changes to the Handbook in the Cryptoassets (Conduct and Firm Standards) Instrument 2026 (FCA 2026/44) and the Glossary (Cryptoassets) Instrument 2026 (FCA 2026/35) have come into force. If this instrument comes into force first, appropriate changes will be made to this instrument and, if necessary, the Cryptoassets (Conduct and Firm Standards) Instrument 2026 and the Glossary (Cryptoassets) Instrument 2026.]

FCA 202X/YY
Amendments to material outside the Handbook E. The material outside the FCA’s Handbook of rules and guidance listed in column (1) below is amended in accordance with the Annexes to this instrument listed in column (2). (1) (2) Enforcement Guide (ENFG) Annex W Financial Crime Guide: A firm’s guide to countering financial crime risks (FCG)
Annex X
Financial Crime Thematic Reviews (FCTR) Annex Y MiFID 2 Onshoring Guide (M2G) Annex Z Notes F. In the Annexes to this instrument, the notes (indicated by “Editor’s note”) are included for the convenience of readers and do not form part of the legislative text but, where so specified, have a legal effect on the layout and format of the Handbook text being amended Citation G. This instrument may be cited as the Individual Accountability (SMCR Review Phase 2) Instrument 2027. By order of the Board [date]

FCA 202X/YY
Annex A
Amendments to the Glossary of definitions In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. Insert the following new definitions in the appropriate alphabetical position. The text is not underlined. approved or notified person a person in relation to whom:
(a) the FCA or the PRA has given its approval under section 59 of the Act (Approval and notification for particular arrangements) for the performance of a controlled function; or (b) a firm has given the FCA or the PRA a notice under section 59 of the Act of the performance of a designated senior management function. authorised approved or notified person employer (in relation to an approved or notified person with a current SMF approval or notification) the firm:
(a) on whose application approval for the performance of the controlled function was given under section 59 of the Act (Approval and notification for particular arrangements); or (b) that made the notification to the FCA or PRA of the performance of the designated senior management function under section 59 of the Act. current SMF approval or notification (a) (in relation to an SMF manager, controlled function or designated senior management function and a firm and at a particular time) means (in accordance with section 59 of the Act (Approval and notification for particular arrangements)):
(i) an approval the firm has for the performance of that controlled function by that SMF manager; or (ii) an SMF notification that the firm has made to the FCA or PRA with respect to the performance of that designated senior management function by that SMF manager,

FCA 202X/YY if that approval or notification is in effect at that time. A reference to an SMF manager ‘holding’ a current SMF approval or notification (and related phrases) must be read accordingly. (b) An approval is treated as having been given by, and an SMF notification is treated as having been given to, the FCA or the PRA if it is deemed to have been given by or to either of them for the purposes of the Act by:
(i) an Act or any subordinate legislation made under that Act; or (ii) rules made by the FCA or the PRA. (c) A person treated as approved under section 59ZZA of the Act (as treated as being inserted into the Act by the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 (SI 2018/1149)) has a current SMF approval or notification. FCA-approved or notified person an approved or notified person:
(a) in relation to whom the FCA has given its approval under
section 59 of the Act (Approval and notification for
particular arrangements) for the performance of an FCA controlled function; or (b) in relation to whom a firm made a notification to the FCA of the performance of an FCA-designated senior management function under section 59 of the Act. FCA-approved or notified SMF manager an SMF manager:
(a) in relation to whom the FCA has given its approval under
section 59 of the Act (Approval and notification for
particular arrangements) for the performance of an FCAdesignated senior management function; or (b) in relation to whom a firm made a notification to the FCA of the performance of an FCA-designated senior management function under section 59 of the Act.

FCA 202X/YY permitted conditional
SMF application a permitted conditional SMF application as defined in section 60A(5) of the Act (Vetting of candidates by authorised person), which, in summary, means an application for approval to the FCA or PRA under section 60 of the Act subject to conditions or for a limited period as permitted by rules made by the FCA or PRA. PRA-approved or notified person an approved or notified person:
(a) in relation to whom the PRA has given its approval under
section 59 of the Act (Approval and notification for
particular arrangements) for the performance of a PRA controlled function; or (b) in relation to whom a firm made a notification to the PRA of the performance of a PRA controlled function under section 59 of the Act. PRA-approved or notified SMF manager an SMF manager:
(a) in relation to whom the PRA has given its approval under
section 59 of the Act (Approval and notification for
particular arrangements) for the performance of a PRAdesignated senior management function; or (b) in relation to whom a firm made a notification to the PRA of the performance of a PRA-designated senior management function under section 59 of the Act. SMF notification a notification made to the FCA or PRA under section 59(1)(b) or 59(2)(b) of the Act (Approval and notification for particular arrangements) of the performance of a designated senior management function. SMF notification procedure the notification procedure contemplated by sections 59(1)(b), 59(2)(b) and 59(3A) of the Act (Approval and notification for particular arrangements) and described in SUP 10C.10A (Notification of the performance of an FCA-designated senior management function) including, where the context requires, that procedure as it applies to the PRA. Amend the following definitions as shown. advising on investments (1) (except in SUP 10A (FCA Approved Persons in Appointed Representatives), SYSC 27 (Senior managers and certification

FCA 202X/YY regime: Certification regime), APER and CONRED 2) the regulated activities, specified in article 53(1) to (1D) and
article 53(2) of the Regulated Activities Order (Advising on
investments), which are:
…
(2) (in SUP 10A (FCA Approved Persons in Appointed Representatives), SYSC 27 (Senior managers and certification regime: Certification regime) and APER) the regulated activities specified in article 53(1) to (1D) and article 53(2) (Advising on investments) of the Regulated Activities Order. For these purposes, advising on investments includes any activities that would be included but for the exclusion in
article 72AA (Managers of UCITS and AIFs) of the
Regulated Activities Order.
… arrangement (as defined in section 59(10) of the Act (Approval and notification for particular arrangements)) any kind of arrangement for the performance of a function of an authorised person (“A”) which is entered into by A or any contractor of his A’s with another person, including, in particular, that other person’s appointment to an office, his their becoming a partner, or his their employment (whether under a contract of service or otherwise). candidate a person in respect of relation to whom an application is made for approval, or in relation to whom a notification is made, under section 59 of the Act (Approval and notification for particular arrangements) of the performance of an FCA controlled function or a PRA controlled function. A person ceases to be a candidate once the application has been finally determined by the FCA or the PRA, the notification has taken effect or when the application or notification is withdrawn. COCON firm activities (as defined in more detail in COCON 1.1.7AR(1) COCON 1A.5.9R and in relation to conduct of a person in relation to a firm) the corresponding activities of the firm as referred to in COCON 1.1.6R COCON 1A.5.3R to COCON 1.1.7R COCON 1A.5.7R (To what conduct does it apply?). conduct rules staff (1) any persons who are subject to COCON (excluding COCON
2.3 (Firms: awareness of staff and breaches)), as set out in
COCON 1 (Application) COCON 1A (Application and purpose); and

FCA 202X/YY
(2) the term “member” of the conduct rules staff of a firm is defined in COCON 1.1.7-AR(2) COCON 1A.5.9R (Definition of COCON firm activities). consumer … (2A) (as further defined in section 425A of the Act) (in relation to the issue of statements or codes under section 64 of the Act) and general exemptions to consultation by the FCA (section 138L of the Act) in the publication of notices (section 391 of the Act) a person:
…
… controlled function a function, relating to the carrying on of a regulated activity by a firm, which is specified by:
… under section 59 of the Act (Approval and notification for particular arrangements). designated senior management function (in accordance with section 59ZB of the Act (Designated senior management functions):
(a) a function that has been designated by the FCA in SUP 10C (FCA senior managers regime for approved and notified persons in SMCR firms) as a designated senior management function; or … director (1) (except in COLL, DTR, UKLR, PRM and MAR 5-A) (in relation to any of the following (whether constituted in the United Kingdom or under the law of a country or territory outside it)):
…
(c) (in SYSC, APER, COCON, MIPRU 2 (Responsibility for insurance distribution and MCD credit intermediation activity), CASS 10A (Payment services and electronic money: resolution pack), CASS 15 (Payment services and electronic money: relevant funds), SUP 3A (Payment services and electronic money), SUP 10A (FCA Approved persons in

FCA 202X/YY
Appointed Representatives) and SUP 10C (FCA senior managers regime for approved or notified persons in SMCR firms) a partnership; (d) (in SYSC, CASS 10A (Payment services and electronic money: resolution pack), CASS 15 (Payment services and electronic money: relevant funds), SUP 3A (Payment services and electronic money), SUP 10A (FCA Approved persons in Appointed Representatives) and SUP 10C (FCA senior managers regime for approved or notified persons in SMCR firms) a sole trader; … … employee (1) (for all purposes except those in (2), (3), (4) and (4A)) an individual:
…
(3) (for the purposes of SYSC 27 (Senior management and certification regime: Certification regime) and the definition of certification employee) has the meaning in section 63E(9) of the Act (Certification of employees by authorised persons) which, in summary, says an employee of a person (the “employer” ) includes a reference to a person who: [deleted] (a) personally provides, or is under an obligation personally to provide, services to the employer under an arrangement made between the employer and the person providing the services or another person, and (b) is subject to (or to the right of) supervision, direction or control by the employer as to the manner in which those services are provided. (4) (for the purposes of SUP 15.11 (Notification of conduct rule breaches and disciplinary action) and COCON) has the meaning in section 64A(6) of the Act (Rules of conduct) which, in summary, says an employee of a person (the ‘employer’) includes a reference to a person who:
…
However, where a Handbook provision in (4) refers to certification employees, (3) still applies to the definition of

FCA 202X/YY certification employee and (in the guidance in COCON where the context requires), an employer may include a person who is not authorised. (4A) (for the purposes of SYSC 22 (Regulatory references)) has the same meaning as in (3) and, in addition, includes a person who:
(a) is an approved person approved or notified person or director of another person (the “employer”); or … (c) performs any service or function for another person (the “employer”) in their capacity as an employee of another member of the employer’s group. For the purpose of (c) an employee of another member of the employer’s group means:
…
(ii) an approved person approved or notified person or director of that group member; or … (d) is a board director of a person (the “employer”) who is not an SMF manager or certification employee of the employer. … FCA candidate a candidate in respect of an FCA controlled function, being a person in respect of whom an application is made to the FCA for approval under section 59 of the Act (Approval or notification for particular arrangements) of the performance of an FCA controlled function or in relation to whom an SMF notification of the performance of an FCA-designated senior management function is made to the FCA. FCA controlled function a controlled function which is specified by the FCA under section 59 of the Act (Approval and notification for particular arrangements) in:
…
Financial Services
Register the public record, as required by section 347 of the Act (The public record), regulation 4 of the Payment Services Regulations (The register of certain payment service providers), regulation 4 of the

FCA 202X/YY
Electronic Money Regulations and article 8 of the MCD Order, of every:
…
(h) approved person approved or notified person; and … management responsibilities map the document describing the management arrangements of certain SMCR firms required by SYSC 25 (Senior management and certification conduct rules regime: Management responsibilities maps and handover procedures and material). material risk taker … (2) (in SYSC 19D and SYSC 27) has the meaning in rule 3.1 of the PRA Remuneration Rules. PRA controlled function a controlled function which is specified by the PRA under section 59 of the Act (Approval and notification for particular arrangements), which are set out in:
…
(2) (for Solvency II firms including large non-directive insurers, and for small non-directive insurers firms in the insurance sector as defined in Part 5 of SYSC 23 Annex 1 (Definition of SMCR firm and different types of SMCR firms)) the Senior Management Functions parts of the PRA Rulebook applicable to Solvency II Firms and Non-Solvency II Firms titled Insurance - Senior Management Functions, Large NonSolvency II Firms – Senior Management Functions and NonSolvency II Firms - Senior Management Functions. PRA-prescribed senior management responsibilities one of the functions described as:
(1) (for CRR firms, credit unions and third country CRR firms (each as defined in the PRA Rulebook)):
…
(c) a ‘UK branch third country CRR firm prescribed responsibility’ in Chapter 6;

FCA 202X/YY
(2) (for firms covered by the Insurance - Allocation of Responsibilities, Non-solvency II Firms - Allocation of Responsibilities and or Large Non-Solvency II Firms – Allocation of Responsibilities parts of the PRA Rulebook) a prescribed responsibility, a third country insurance provider prescribed responsibility, a Swiss general insurer prescribed responsibility, a small non-directive insurer prescribed responsibility or a third country branch prescribed responsibility as defined in those parts; and … proprietary trader (in SYSC 27 (Senior managers and certification regime: (Certification regime) and COCON) a person (A) whose responsibilities include committing another person (B) as part of B’s proprietary trading. proprietary trading (in SYSC 27 (Senior managers and certification regime: (Certification regime) and COCON) dealing in investments as principal as part of a business of trading in specified investments. For these purposes dealing in investments as principal includes:
… senior conduct rules staff member
(in COCON) a person who: is stated to be a member of the senior conduct rules staff in the table in COCON 1A.2.2R (Table: To whom does COCON apply?). (a) comes within row (1) of the table in COCON 1.1.2R (an SMF manager); (b) comes within row (2) of the table in COCON 1.1.2R (an employee of an SMCR firm who performs the function of an SMF manager); (c) [deleted] (d) comes within row (8) of the table in COCON 1.1.2R (a board director of a UK SMCR firm); (e) comes within row (3) of the table in COCON 1.1.2R (a person appointed under SUP 10C.3A.6R (The 12-week rule:
The main rules)); or
(f) comes within row (9) of the table in COCON 1.1.2R (a person appointed under PRA rules corresponding to the rules in (e)).

FCA 202X/YY
SMF manager (in relation to an SMCR firm) a person who has in relation to whom:
(a) the FCA or the PRA has given its approval under section 59 of the Act (Approval and notification for particular arrangements) to perform for the performance of a designated senior management function in relation to the carrying on by that SMCR firm of a regulated activity.; or (b) a firm has given the FCA or the PRA a notice under section 59 of the Act of the performance of a designated senior management function. … staff being assessed under FIT (in FIT and in relation to an SMCR firm) those persons set out in FIT 1.1.1G(4) to (8) the table in FIT 1.1.5G (Table: fitness and propriety requirements covered by FIT) and described as being subject to an assessment of fitness and propriety. statement of responsibilities a statement provided under section 60(2A) of the Act (Applications for approval) document prepared by an SMCR firm that sets out the responsibilities of an SMF manager of that SMCR firm in accordance with SYSC 24A (Senior managers and conduct rules regime:
Statements of responsibilities) and as referred to in SYSC 24A.2.2R (Requirement to have a statement of responsibilities), including:
(a) a statement that document as revised under section 62A of the Act (Changes in responsibilities of senior managers) or under SUP 10C.11 (Statements of responsibilities) SYSC 24A; and … whistleblowers’ champion (a) (in SYSC 4.7) an individual appointed by a firm under SYSC 4.7.5R(1) with the allocated responsibilities in SYSC 18.4.4R; (b) (in SYSC 18) (Whistleblowing) an individual appointed by a firm under either SYSC 4.7.5R(1) or SYSC 18.4.2R, as applicable, with the allocated responsibilities in SYSC 18.4.4R. Delete the following definitions. The text is not shown. appointed representative Directory person approved person

FCA 202X/YY authorised approved person employer certification employee certification function current approved person approval current FCA approved person approval current PRA approved person approval Directory Directory person FCA certification function FCA -approved person FCA -approved SMF manage r MiFID authorisation and management body change notification ITS non -SMF director Directory person other local responsibility function other overall responsibility function PRA certification function PRA -approved person significant -harm function sole trader Directory person

FCA 202X/YY standard nonexecutive director

FCA 202X/YY
Annex B
Amendments to the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise indicated. 1 Application and purpose 1.1A Application 1.1A.1 G The application of this sourcebook is summarised at a high level in the following table. The detailed application is cut back in SYSC 1 Annex 1 and in the text of each chapter. Type of firm Applicable chapters Insurer, UK ISPV Chapters 2, 3, 12 to 18, 19F.2, 21, 22, 23, 24, 25, 26, 27, 28, 28A Managing agent Chapters 2, 3, 11, 12, 15A, 18, 19F.2, 21, 22, 23, 24, 25, 26, 27, 28, 28A Society Chapters 2, 3, 12, 15A, 18, 19F.2, 21, 22, 23, 24, 25, 26, 27, 28, 28A Any other SMCR firm Chapters 4 to 12, 15A, 18, 19D, 19F, 19G, 21, 22, 23, 24, 25, 26, 27, 28, 28A … … 1.1A.1 A G The application of this sourcebook to specific firms that are not PRA-authorised persons is summarised at a high level in the following table. The detailed application is cut back in SYSC 1 Annex 1 and in the text of each chapter. Type of firm Applicable chapters Full-scope UK AIFM Chapters 4 to 10, 12, 18, 19B, 19F.2, 21, 22, 23, 24, 25, 26, 27, 28, 28A

FCA 202X/YY
MIFIDPRU investment firm
(including an overseas firm that would have been a MIFIDPRU investment firm if it had been a UK domestic firm, except that SYSC 19G does not apply to such a firm) Chapters 4 to 10, 12, 18, 19F, 19G, 21, 22, 23, 24, 25, 26, 27, 28, 28A …
1.5 Significant SYSC firm
Purpose
1.5.1 G …
(4) The definition of significant SYSC firm is also relevant in determining whether a firm is an enhanced scope SMCR firm for the purposes of the senior managers and certification regime. [deleted] … 2 Senior management arrangements
2.1 Apportionment of Responsibilities
…
2.1.2 G The role undertaken by a non-executive director will vary from one firm to
another. For example, the role of a non-executive director in a friendly society may be more extensive than in other firms. Where a non-executive director is an approved person approved or notified person, for example where the firm is a body corporate, his their responsibility and therefore liability will be limited by the role that he undertakes they undertake. … 3 Systems and controls
3.1 Systems and controls
…
Competent employees rule
3.1.6 R …

FCA 202X/YY
3.1.6A G A firm’s systems and controls should enable it to satisfy itself of the suitability of anyone who acts for it. This includes assessing an individual’s honesty and competence. This assessment should normally be made at the point of recruitment. An individual's honesty need not normally be revisited unless something happens to make a fresh look appropriate. …
3.2 Areas covered by systems and controls
…
Employees and agents
…
3.2.14 G …
(4) The requirements on firms with respect to approved persons approved or notified persons are in Part V of the Act (Performance of regulated activities) and SUP 10C and the Senior Insurance Management Functions parts of the PRA Rulebook. … 4 General organisational requirements
4.1 General requirements
…
Mechanisms and procedures for a firm
4.1.4 R A firm (with the exception of a common platform firm and a sole trader who
does not employ any person who is required to be approved or notified under
section 59 of the Act (Approval and notification for particular arrangements))
must, taking into account the nature, scale and complexity of the business of the firm, and the nature and range of the financial services, claims management services and other activities undertaken in the course of that business:
…
…
4.2 Persons who effectively direct the business
…

FCA 202X/YY
Alternative arrangements
…
4.2.8 G Where the senior personnel of a full-scope UK AIFM will carry out a FCA
governing function and the firm has applied for the FCA’s approval or made a SMF notification under section 59 of the Act, this will be considered sufficient to comply with SYSC 4.2.7R.
4.3 Responsibility of senior personnel
4.3.1 R A firm (with the exception of a common platform firm and a sole trader who
does not employ any person who is required to be approved or notified under
section 59 of the Act (Approval and notification for particular arrangements)),
when allocating functions internally, must ensure that senior personnel and, where appropriate, the supervisory function, are responsible for ensuring that the firm complies with its obligations under the regulatory system. In particular, senior personnel and, where appropriate, the supervisory function must assess and periodically review the effectiveness of the policies, arrangements and procedures put in place to comply with the firm’s obligations under the regulatory system and take appropriate measures to address any deficiencies. [Note: articles 9(1) and 9(3) of the UCITS implementing Directive] …
4.4 Apportionment of responsibilities
Application
4.4.1A R …
(1) This section applies to an authorised professional firm as follows:
…
(b) it does not apply if the firm:
…
(ii) has appointed approved persons approved or notified persons to perform the FCA governing functions with equivalent responsibilities for the firm’s non-mainstream regulated activities and other regulated activities. … (5) This section only applies to a sole trader if they:

FCA 202X/YY
(a) have any person (other than themselves) who is required to be approved or notified under section 59 of the Act (Approval and notification for particular arrangements); or (b) are an authorised approved person employer authorised approved or notified person employer (except where they are the only approved person concerned); or approved or notified person. (c) have any certification employees. [deleted] … Allocating functions of apportionment and oversight …
4.4.6 G Frequently asked questions about allocation of functions in SYSC 4.4.5R
Question Answer
1 Does an individual to whom a function is allocated under SYSC 4.4.5R need to be an approved person approved or notified person? … … … 5 Employees, agents and other relevant persons
5.1 Skills, knowledge and expertise
…
Competent employees rule
…
5.1.5 G The requirements on firms with respect to approved persons approved or
notified persons are in Part V of the Act (Performance of regulated activities) and SUP 10A, SUP 10C and in the corresponding parts of the PRA’s Rulebook PRA Rulebook.

FCA 202X/YY
…
6 Compliance, internal audit and financial crime
6.1 Compliance
…
Compliance function
…
6.1.4C R …
(3) This rule also applies to a firm that meets the following conditions:
…
(b) SUP 10C (FCA senior managers regime for approved or notified persons in SMCR firms) applies the compliance oversight function to it. …
6.3 Financial crime
…
6.3.8 R …
(2) A firm may not allocate overall responsibility under (1) to a person who is approved to perform the other overall responsibility function. [deleted] … 13 Operational risk: systems and controls for insurers …
13.6 People
…
Employee responsibilities
…

FCA 202X/YY
13.6.4 G A firm should have regard to SYSC 13.6.3G in relation to approved persons
approved or notified persons, people occupying positions of high personal trust (for example, security administration, payment and settlement functions); and people occupying positions requiring significant technical competence (for example, derivatives trading and technical security administration). A firm should also consider the rules and guidance for approved persons approved or notified persons in other parts of the Handbook (including APER, COCON and SUP) and the rules and guidance on senior manager responsibilities in SYSC
2.1 (Apportionment of Responsibilities).
…
18 Whistleblowing
…
18.3 Internal arrangements
…
Link to fitness and propriety
18.3.9 G The FCA would regard as a serious matter any evidence that a firm had acted to
the detriment of a whistleblower. Such evidence could call into question the fitness and propriety of the firm or relevant members of its staff, and could therefore, if relevant, affect the firm’s continuing satisfaction of threshold condition 5 (Suitability) or, for an approved person or a certification employee approved or notified person, their status as such. …
18.4 The whistleblowers’ champion
18.4.1 G (1) A UK SMCR banking firm is required under SYSC 24.2.1R to allocate
the FCA-prescribed senior management responsibility for acting as the firm’s whistleblowers’ champion. [deleted] (2) SYSC 18.4.2R requires the appointment by an insurer of a director or senior manager as its whistleblowers’ champion. [deleted] …
18.4.2 R An insurer and a UK SMCR banking firm must appoint a director or senior
manager as its whistleblowers’ champion.
…
21 Risk control: additional guidance

FCA 202X/YY
21.1 Risk control: guidance on governance arrangements
…
Chief Risk Officer
21.1.2 G …
(2) Firms will need to seek the FCA’s or PRA’s (as appropriate) approval or make an SMF notification to the FCA or the PRA (as appropriate) for a Chief Risk Officer to perform:
…
…
…
22 Regulatory references
…
22.2 Getting, giving and updating references: the main rules
Obligation to obtain references
22.2.1 R (1) If a firm (A) is considering:
(a) permitting or appointing someone (P) to perform a controlled function; or (b) issuing a certificate under the certification regime for P; or [deleted] … … Obligation to give references
22.2.2 R (1) A firm (B) must provide a reference to another SMCR firm (A) as soon
as reasonably practicable if:
(a) A is considering:
…

FCA 202X/YY
(ii) issuing a certificate under the certification regime for P; or [deleted] … … …
22.2.3 R Table: What positions need a reference
Position When to obtain reference
Comments
(A) Permitting or appointing someone to perform an FCA controlled function or a PRA controlled function. One month before the end of the application period. In the case of an SMF notification, the time is one month before the notification is made. Where a request for a reference would require:
(a) the firm requesting the reference;
(b) the employer giving the reference; or (c) any other person; to make a mandatory disclosure prior to P disclosing to its current employer that such application or notification has been made, the date is:
(d) the end of the application period. (in the case of an application); or

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(e) the time the notification is made
(in the case of an SMF notification).
(B) Issuing a certificate under
section 63F of the
Act (Certification of employees by authorised persons).
[deleted]
Before the certificate is issued
This includes renewing an existing certificate.
(C) Appointing someone to any of the following positions (as defined in the PRA Rulebook):
(a) a notified nonexecutive director;
(b) a credit union non-executive director; or (c) a key function holder. [deleted] Not applicable (1) SYSC 22.2.1R (obligation to obtain a reference) does not apply to a firm appointing someone to the position in column (1). (2) However SYSC 22.2.2R does apply to a firm asked to give a reference to a firm appointing someone to the position in column (1). (3) The obligation to give a reference only applies if the person making the appointment is a PRAauthorised person. (D) An SMCR firm appointing or permitting someone to be a non-SMF board director of itself. Before appointment (1) Only applies where the appointment is by a UK SMCR firm that is:
(a) a core SMCR firm; or
(b) an enhanced scope SMCR firm.
(2) In addition, SYSC
22.2.2R applies to an SMCR firm that is an FCAauthorised person asked to give a reference to an SMCR firm that is a PRA-authorised person in relation to a person whom it is appointing to the position:

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(a) of a Conduct Rules nonexecutive director as defined in the PRA Rulebook; or (b) referred to in rule 2.1A of the part of the PRA Rulebook titled Insurance - Fitness and Propriety, if that PRA-authorised person is required by the PRA Rulebook to obtain that reference. … … .
22.7 Getting references: additional rules and guidance for SMCR firms
…
Asking for a reference to be updated
22.7.5 G (1) SYSC 22.2.1R (Obligation to obtain references) applies even if the
employer has already got a reference for the employee. For example:, (a) a firm should have a reference whenever it renews the certificate of a certification employee; and (b) changing jobs within the same firm may require a reference. (2) However, the firm does not necessarily need to obtain a new reference each time (a) or (b) (1) above occurs. That is because an existing reference will very often still be appropriate for the purpose (see SYSC 22.7.6G to SYSC 22.7.8G SYSC 22.7.7G and SYSC 22.8A.3G (Intragroup transfers)).
22.7.6 G If a firm (A): [deleted]
(1) appoints someone (P) to a certification function position; (2) obtains a reference from an ex-employer; and (3) later wishes to renew P’s certificate under the certification regime;

FCA 202X/YY it is unlikely that A will need to ask for another reference from that ex-employer or ask for it to be reissued unless there is a change in P’s role of the type described in SYSC 27.2.15G (major changes in role).
22.7.7 G (1) If a firm (A):
…
(c) later wishes to:
(i) appoint P to another reference position; or (ii) (in the case of a certification function) keep P in the same certification function but make a change in P’s role of the type described in SYSC 27.2.15G (major changes in role), whether that change is made at a time when the certificate has not yet come up for renewal or at the time it is being reissued; or [deleted] (iii) move P from one kind of reference position to another kind (for example, from a certification function non-SMF board director to an approved person approved or notified person position or vice versa), … … … When references are to be obtained …
22.7.10 G (1) Where a firm needs to fill a vacancy for a certification function which
could not have reasonably been foreseen, the FCA recognises that it may not be reasonable to expect the firm to obtain references prior to issuing a certificate. [deleted] (2) In such cases, the SMCR firm should take up the reference as soon as reasonably possible. (3) If a reference obtained later raises concerns about the person’s fitness and propriety, the firm should revisit its decision to issue the person with a certificate.
22.7.11 G (1) Although this chapter (see SYSC 22.2.3R) only requires a firm to try to
get a reference for a person it is recruiting to perform an FCA controlled

FCA 202X/YY function or a PRA controlled function where the firm is applying for approval under section 59 of the Act (Approval and notification for particular arrangements) towards the end of the application process, the FCA would normally expect a firm to have obtained the reference before the application for approval is made. … …
22.8 Policies and requests for references from and by persons who are not firms
[Editor’s note: As explained in the note at the start of this draft instrument, SYSC 22.8.3 to SYSC
22.8.10 (Appointed representatives) are not included in this consultation.]
…
Firms applying for authorisation
…
22.8.12 G …
(3) The first column of row (B) of the table in SYSC 22.2.3R should be read as referring to issuing a certificate if the person is authorised. [deleted] (4) Rows (C) and Row (D) of the table in SYSC 22.2.3R only apply applies if the person to be appointed as described in the first column will fall into the relevant category if the person is authorised. (5) Row (C) of the table in SYSC 22.2.3R only applies if the person applying for authorisation will be a PRA-authorised person if the person is authorised. Row (D) of that table only applies if the person applying for authorisation will be a firm of the type described in the ‘Comments’ column of that row if the person is authorised. … 22.8A Groups and outsourcing Intra-group transfers … 22.8A.3 G If:
…

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(3) later P transfers to a reference position with an another SMCR firm in A’s group (C); … (5) C does not need to ask for the reference to be reissued or amended, taking account of SYSC 22.7.6G and SYSC 22.7.7G; … … 22
Annex
1
Template for regulatory references given by SMCR firms and disclosure requirements 22
Annex
1.1
R Part One: Form of Template
…
The answers to Questions A to F cover the period beginning six years before the date of your request for a reference and ending on the date of this reference [Editor’s note: the question references (eg, ‘Question A’) in the table below are underlined but such underlining does not indicate new text.] Question A Has the individual:
(1) performed a certification function for our firm; or (2) been an approved or notified person for our firm. … Question B:
Has the individual performed one or more of the following roles in relation to our firm:
(1) notified non-executive director PRA certification function; or

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(2) credit union non-executive director; (3) key function holder (other than a controlled function); or (4) (2) board director. … Question C:
If we have answered ‘yes’ to either Question A or B above, we set out the details of each position held below, including:
(1) what the controlled function, PRA certification function or key function holder director role is or was; (2) (in the case of a controlled function) whether the approval or SMF notification is or was subject to a condition, suspension, limitation, restriction or time limit; … … Question F:
We have taken disciplinary action against the individual that:
(1) relates to an action, failure to act, or circumstances, that amounts to a breach of any individual conduct requirements that:
(a) apply or applied to the individual; or (b) (if the individual is or was a key function holder, or a notified nonexecutive director or a credit union non-executive director for your firm) the individual is or was required to observe under PRA rules (including if applicable, PRA rules in force before 7 March 2016); or … … 22
Annex
1.2
R Part Two: Definitions used in Part One …

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Section One: Meaning of certain terms and phrases
Defined term or phrase Meaning
…
A finding or conclusion by
B that P was not fit and proper to perform a function (see questions (E) to (F) of the template) This means a finding or conclusion by B where:
(a) B assesses the continuing fitness and propriety of P as an approved person approved or notified person in accordance with the requirements of the regulatory system, including when carrying out this assessment under section 63(2A) of the Act (annual assessment of approved person approved or notified person by an SMCR firm); or (b) B assesses assessed the fitness and propriety of P when B is was proposing to issue a certificate under section 63F of the Act (Certification of employees by SMCR firms) for P. Paragraph (b) applies whether the certificate is was being issued for the first time or is was being renewed but only applies to a PRA certification function. … Function (as referred to in questions (E) to (F)) A function means a function as an approved person approved or notified person or certification employee PRA certification employee. Disciplinary action Disciplinary action has the same meaning as in
section 64C(2) of the Act (Requirement for
authorised persons to notify regulatory of disciplinary action), which is means:
(1) (where P is an approved or notified person or another kind of senior conduct rules staff member of B):
(a) the issue of a formal written warning; or (b) the suspension or dismissal of P; or

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(c) the reduction or recovery of any of P’s remuneration.; (2) (where B is a PRA-authorised person and P does not come within (1) but is subject to the PRA’s conduct rules as listed in paragraphs (c) and (d) of the definition of ‘Individual conduct requirements’ in this Annex):
(a) the issue of a final written warning; or (b) the suspension or dismissal of P; or (c) the reduction or recovery of any of P’s remuneration; or (3) (in any other case):
(a) the issue of a final written warning; or (b) dismissal. This definition applies even if B is not an SMCR firm. The category of employee into which P falls depends on the category into which they fell at the time of the breach or, as the case may be, the time at which the firm concluded that P was not fit and proper. Notified non-executive director, credit union nonexecutive director and key Key function holder These terms have This term has the same meaning as they do it does in the PRA Rulebook. PRA certification function and PRA certification employee These definitions apply to the PRA’s certification regime before it was repealed in 2027. ‘PRA certification function’ means a significant-harm function that was specified by the PRA under section 63E of the Act and which consequently was a specified function as defined in section 63E(2) of the Act. A ‘significant-harm function’ has the meaning set out in section 63E(5) of the Act. A ‘PRA certification employee’ (as described in more detail in section 63E(1) of the Act) means an employee of an SMCR firm that is a PRA-authorised person who had a valid

FCA 202X/YY certificate issued by that SMCR firm in relation to a PRA certification function. ‘Section 63E of the Act’ (Certification of employees by authorised persons) refers to that
section before it was repealed.
Certification function, approved Approved or notified person, SMF notification, senior conduct rules staff member, controlled function and PRA controlled function These terms have the same meaning as they do in the Glossary. … Potential FCA governing function Potential FCA governing function means a function:
(a) that would have been an FCA controlled function but for:
…
(ii) SUP 10C.9 (Minimising overlap with the PRA approved and notified persons regime); … … … 23 Senior managers and certification conduct rules regime: Introduction and classification
23.1 Purpose
23.1.1 G The purpose of this chapter is to:
(1) explain what the senior managers and certification conduct rules regime is and where to find the main FCA Handbook provisions; …
23.2 Definitions and types of firms
…

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23.2.2 G Broadly speaking, firms covered by the senior managers and certification
conduct rules regime that are dual-regulated by the FCA and the PRA are divided into two categories:
…
23.2.3 G Broadly speaking, firms covered by the senior managers and certification
conduct rules regime that are regulated by the FCA are divided into three categories:
…
23.3 Overview of the senior managers and certification conduct rules regime
23.3.1 G There are three 2 main elements to the regime:
(1) the senior managers regime; and
(2) the certification regime; and [deleted] (3) conduct rules that apply directly to a firm’s workforce.
23.3.2 G The table in SYSC 23.3.3G gives more details about each of those three
elements. The first two columns of the table apply to all firms. The third column only covers firms that are not regulated by the PRA.
23.3.3 G Table: Summary of the senior managers and certification conduct rules
regime
(1)
Description of component of the regime
(2)
Handbook provisions
(3)
Application to solo-regulated firms
The senior managers regime: Parts that apply to all firms Pre-approval by, or notification to, the FCA of senior management (the FCA Handbook calls senior management subject to preapproval or notification by or to the FCA SMF managers). Notification does not involve pre-approval by the FCA. … …

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Firm to be satisfied that a person is fit and proper before applying for them to be approved as an SMF manager by the FCA or PRA or before notifying the FCA or PRA of their appointment as an SMF manager This requirement is in
section 60A of the Act.
There is guidance on it in relation to the FCA’s regime in SUP 10C.10.14G (Vetting of candidates by the firm) and SUP 10C.10A.6G (Vetting by the firm). … Annual assessment of fitness and propriety by the SMF managers’ firms. It applies whether the SMF manager has been approved by the FCA or PRA or is subject to the SMF notification procedure. This requirement is in
section 63(2A) of the Act.
There is guidance and related notification obligations in SUP 10C.14.18R to SUP 10C.14.25G (Notifications about fitness, disciplinary action and breaches of COCON) in relation to the FCA’s regime. … A firm should carry out criminal records checks before applying for someone to be approved by the FCA as an SMF manager or notifying the FCA of the appointment of someone as an SMF manager, with certain exceptions described in the rule rules referred to in column (2) of this row where the firm has already done a check or in the case of a sole trader SUP 10C.10.16R (Criminal records checks and verifying fitness and properness) and SUP 10C.10A.8R (Criminal records checks and verifying fitness and properness) … A firm should ask for a regulatory reference before appointing someone to be an SMF manager, or to certain other senior management positions, and give one if asked to by another firm doing so. … …

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This applies whether the firm is applying for the person to be approved as an SMF manager or is notifying the FCA or PRA of their appointment under the provisions of the Act described in SUP 10C.10A. Statements of responsibilities This is a document that sets out the responsibilities that an SMF manager performs as
part of their designated
senior management function.
It is prepared as part of the firm’s application to the FCA or (if the firm is a PRAauthorised person) PRA for them to be approved as an SMF manager. It should be updated after approval when there has been any significant change in the responsibilities of the SMF manager SUP 10C.11 SYSC 24A (Senior managers and conduct rules regime:
Statements of responsibilities).
Many of the requirements are in the Act itself but they are summarised in SUP 10C.11. SUP 10C.11 also adds some further requirements, particularly about there being one statement of responsibilities per SMF manager per firm. … … The senior managers regime: Parts that apply to many firms … A firm solo-regulated by the FCA should:
(1) only appoint someone as a board director who does not need approval or, as the case may be, does not need to be notified, as an SMF manager for the position if they are fit and proper for that role; and (2) carry out criminal records checks before making the appointment … …

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The senior managers regime: Parts that only apply to a limited range of firms A firm should maintain a comprehensive and up-todate document (called the management responsibilities map) that describes its management and governance arrangements SYSC 25 (Senior managers and certification conduct rules regime: Management responsibilities maps and handover procedures and material) … A firm should ensure that, at all times, one or more of its SMF managers have overall responsibility for each of the activities, business areas and functions of the firm. SYSC 26 (Senior managers and certification conduct rules regime: Overall and local responsibility) … … Firms should report changes to their management body when members who are not SMF managers leave or join it. SUP 15.16 (Notification of changes in the management body) Only applies to a MiFID investment firm or a MiFID optional exemption firm. … The certification regime A firm should not permit an employee to carry out certain functions (certification functions) unless it has issued them with a certificate. The certificate is only valid for a year. The firm will have to renew it if the employee is to carry on performing the function. A firm may not issue or renew a certificate unless it is satisfied that the person is fit and proper. Most of the requirements of this regime are in sections 63E (Certification of employees by authorised persons) and 63F (Issuing of certificates) of the Act. SYSC 27 (Senior managers and certification regime:
Certification regime) describes the regime and explains which employees are covered. Applies to all solo-regulated firms except for internally managed AIFs and pure benchmark SMCR firms. The certification regime does not apply to benchmark activities.

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Certification does not involve pre-approval by the FCA or PRA. A firm should ask for a regulatory reference before appointing someone to perform an FCA certification function (or a PRA equivalent) and give one if asked to by another firm doing so. SYSC 22 (Regulatory references) Applies to all solo-regulated firms A firm must report information to the FCA about its Directory persons, including its certification employees. SUP 16.26 (Reporting of information about Directory persons) Applies to all solo-regulated firms except pure benchmark SMCR firms Conduct rules (applies to all firms) … A firm should report breaches of COCON to the FCA
Section 64C of the Act
(Requirement for authorised persons to notify regulator of disciplinary action) and SUP 15.11 (Notification of COCON breaches and disciplinary action) … A firm should ensure that all persons subject to COCON are notified of:
(a) ensure that all persons subject to COCON are notified of the COCON rules that apply to them; and (b) take all reasonable steps to ensure that they understand how COCON applies to them the consequences of a breach of those rules These obligations are in
section 64B of the Act
(Rules of conduct:
responsibilities of authorised persons).
There is guidance in
COCON 2.3 (Firms:
Training awareness of staff and breaches).
…

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23.3.4 G The PRA has requirements corresponding to the senior managers and
certification conduct rules regime that apply to PRA-authorised persons. The FCA and PRAs’ regimes are designed to work together and complement each other. A PRA-authorised person will therefore need to consider the PRA’s requirements to get a complete picture of the requirements that apply to it (and its workforce) in the area covered by the senior managers and certification conduct rules regime and the requirements in the Act on which it is based.
23.4 Checks for certain directors
…
23.4.4 R SYSC 23.4.2R does not apply if:
(1) the person to be appointed is already performing, and has approval for the performance of is subject to a current SMF approval or notification in relation to, a designated senior management function for the firm or another firm in the same group; (2) the person to be appointed was performing, and had approval for the performance of was subject to a current SMF approval or notification in relation to, a designated senior management function for the firm or another firm in the same group within 1 month before the appointment; or … … 23
Annex 1
Definition of SMCR firm and different types of SMCR firms 23
Annex
1.1
Part One: Flow diagram and other basic provisions
…
23
Annex
1.2

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Part Two: Changing category
…
2.2 G …
(3) …
(4) In deciding whether to impose a requirement described in (1), the criteria the FCA may take into account include:
(a) the size, complexity or market impact of the firm or its group; and (b) whether a firm would meet any of the qualification conditions for being an enhanced scope SMCR firm if the conditions were applied to the firm’s group on a consolidated basis. … 23
Annex
1.3
Part Three: Definition of exempt firm
…
23
Annex
1.4
Part Four: Definition of banking sector
…
23
Annex
1.5
Part Five: Definition of insurance sector

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…
23
Annex
1.6
Part Six: Definition of limited scope SMCR firm
…
Benchmark firms: When the waiver is likely to be available
6.15 G …
(4) On the other hand, applying the Act and the FCA’s requirements directly to a firm’s most senior management will make it more likely that they will take steps and put in place systems that will increase the likelihood that the firm’s staff will meet the requirements of the senior managers and certification conduct rules regime and that the values represented by those requirements will be absorbed into the firm’s culture. It also helps to ensure that the firm’s leaders have sufficient knowledge of, and skills in, the firm’s regulated activities. … … 23
Annex
1.7
Part Seven: Exclusion from enhanced regime
…
23
Annex
1.8
Part Eight: Financial qualification condition for being an enhanced scope SMCR
firm

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The financial qualification tests
…
8.2 R Table: Financial qualification conditions
(1)
Qualification condition
(2)
How to do the calculation and corresponding reporting requirement (3) Comments
Part One: Point in time measurements
(1) The average amount of the firm’s assets under management (calculated as a three-year rolling average) is £65 £100 billion or more … … …
Part Two: Revenue measurements
(1) The average amount of the firm’s total intermediary regulated business revenue (calculated as a threeyear rolling average) is £45 £75 million per annum or more … … SYSC 23 Annex 1 8.18R SYSC 23
Annex 1.8A.1R
applies this condition to firms to which the reporting requirement in column (2) does not apply in the cases specified in that rule. (2) The average amount of the firm’s annual revenue generated by regulated consumer credit lending (calculated as a three-year rolling average) is £130 £200 million or more … …

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Part Three: Measurements over time
(1) The average amount of the firm’s assets (calculated as a 3-year rolling average) is £750 million or more Assets are calculated as follows:
(a) calculate the amount that must be recorded for data elements 4 (total fixed assets) and 13 (total current assets) in data item FSA029 (Balance Sheet); and (b) add those amounts together. (1) This row only applies to a firm that meets the conditions in SYSC 23 Annex 1.8A.11R. (2) SYSC 23 Annex 1.8.8R(2) and SYSC 23 Annex 1.8.11R apply to this calculation. … Averaging periods …
8.9 G (1) SYSC 23 Annex 1 8.8R(2) provides for a firm’s status to be
tested quarterly if the relevant data item is reported quarterly, to be tested every six months if the relevant data item is reported in six-month intervals and to be tested yearly if the relevant data item is reported yearly. … … Automatic adjustment of financial thresholds: Purpose and general rule
8.23 R …
(2) The financial figures to be adjusted are the ones in the following rows of column (1) of the table:
…
(d) row (3) of Part One of the table (stablecoin issuance backing asset pool); and (e) row (4) of Part One of the table (cryptoassets and safe custody assets pool).; and (f) row (1) of Part Three of the table (assets of an investment firm).

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…
23
Annex
1.8A
Part Eight A: Special requirements for calculating financial qualification conditions
…
8A.10 G …
Additional conditions for investment firm assets qualification condition 8A.11 R The additional criteria that a firm must meet as referred to in column (3) of row (1) of Part 3 of the table in SYSC 23 Annex 1.8.2R (Table:
Financial qualification conditions) are as follows:
(1) it is an investment firm, as defined in article 4(1)(2) of the UK CRR (including a collective portfolio management investment firm) as it had effect on 27 January 2023; and (2) it is not excluded by any of the exclusions in SYSC 23 Annex 1.8A.12R. 8A.12 R (1) A firm is excluded for the purposes of SYSC 23 Annex 1.8A.11R(2) if it is a local firm. (2) A firm is excluded for the purposes of SYSC 23 Annex 1.8A.11R(2) if it meets the following conditions:
(a) it is authorised to provide one or more of the following investment services:
(i) reception and transmission of orders in relation to one or more financial instruments; (ii) execution of orders on behalf of clients; (iii) portfolio management; (iv) investment advice; and (v) providing targeted support;

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(b) it is not authorised to provide any other investment services; (c) it is not authorised to provide the ancillary service referred to in paragraph 1 of Part 3A of Schedule 2 to the Regulated Activities Order (Safekeeping and administration of financial instruments); and (d) it is not permitted to hold MiFID money or securities (as defined in (3)) belonging to its clients and, for that reason, may not at any time place itself in debt with those clients in relation to its MiFID business. (3) ‘MiFID money or securities’ (as referred to in (2)(d)) means money or securities that a firm receives from, or holds for or on behalf of, a client in the course of, or in connection with, its MiFID business. 8A.13 R (1) A firm that is authorised to execute investors’ orders for financial instruments and to hold such financial instruments for its own account is not, for that reason, authorised for the purpose of SYSC 23 Annex 1.8A.12R to provide the investment service of dealing on own account if it meets the following conditions:
(a) such positions only arise as a result of the firm’s failure to match investors’ orders precisely; (b) the total market value of all such positions is no higher than 15% of the firm’s initial capital; and (c) such positions are incidental and provisional in nature and strictly limited to the time required to carry out the transaction in question. (2) Position and initial capital have the meaning that they had for the purpose of IFPRU 1.1.12R (Meaning of dealing on own account) as it applied on 31 December 2021. 8A.14 G The purpose of the criteria in SYSC 23 Annex 1.8A.11R to SYSC 23
Annex 1.8A.13R is to replicate the main part of the definition of
‘IFPRU investment firm’. Other elements of the definition are reflected elsewhere in this Annex. However, the definition applies to a firm whether or not it ever has been treated as an IFPRU investment firm for the purposes of any rules that used that definition.

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23
Annex
1.9
Part Nine: Other qualification conditions for being an enhanced scope SMCR firm
9.1 R A firm meets a qualification condition for the purposes of identifying
an enhanced scope SMCR firm under the flow diagram in Part One of this Annex if it meets one of the following criteria:
(1) the firm is a significant SYSC firm and it meets all the additional criteria in SYSC 23 Annex 1 9.3R; [deleted] …
9.2 G If a firm is subject to a requirement that it must comply with the rules
in the FCA Handbook applicable to one of the categories of a firm in SYSC 23 Annex 1 9.1R(1) or SYSC 23 Annex 1 9.1R(2), it is to be treated as falling into that category of firm for the purpose of this
Annex as well.
9.3 R The additional criteria that a significant SYSC firm must meet as
referred to in SYSC 23 Annex 1 9.1R(1) are as follows: [deleted] (1) it is an investment firm, as defined in article 4(1)(2) of the UK CRR (including a collective portfolio management investment firm) as it has effect on 27 January 2023; and (2) it is not excluded by any of the exclusions in SYSC 23 Annex 1 9.4R.
9.4 R (1) A firm is excluded for the purposes of SYSC 23 Annex 1
9.3R(2) if it is a local firm. [deleted] (2) A firm is excluded for the purposes of SYSC 23 Annex 1 9.3R(2) if it meets the following conditions:
(a) it is authorised to provide one or more of the following investment services:
(i) reception and transmission of orders in relation to one or more financial instruments; (ii) execution of orders on behalf of clients; (iii) portfolio management;

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(iv) investment advice; and
(v) providing targeted support;
(b) it is not authorised to provide any other investment services; (c) it is not authorised to provide the ancillary service referred to in paragraph 1 of Part 3A of Schedule 2 to the Regulated Activities Order (Safekeeping and administration of financial instruments); and (d) it is not permitted to hold MiFID money or securities (as defined in (3)) belonging to its clients and for that reason may not at any time place itself in debt with those clients in relation to its MiFID business. (3) MiFID money or securities (as referred to in (2)(d)) means money or securities that a firm receives from, or holds for or on behalf of, a client in the course of, or in connection with, its MiFID business.
9.5 R (1) A firm that is authorised to execute investors’ orders for
financial instruments and to hold such financial instruments for its own account is not, for that reason, authorised for the purpose of SYSC 23 Annex 1 9.4R to provide the investment service of dealing on own account if it meets the following conditions: [deleted] (a) such positions only arise as a result of the firm’s failure to match investors’ orders precisely; (b) the total market value of all such positions is no higher than 15% of the firm’s initial capital; and (c) such positions are incidental and provisional in nature and strictly limited to the time required to carry out the transaction in question. (2) Position and initial capital have the meaning that they had for the purpose of IFPRU 1.1.12R (Meaning of dealing on own account) as it applied on 31 December 2021.
9.6 G The purpose of the criteria in SYSC 23 Annex 1 9.3R to SYSC 23
Annex 1 9.5R is to replicate the main part of the definition of ‘IFPRU
investment firm’. Other elements of the definition are reflected elsewhere in this Annex. However, the definition applies to a firm

FCA 202X/YY whether or not it ever has been treated as an IFPRU investment firm for the purposes of any rules that used that definition. [deleted] 23
Annex
1.10
Part Ten: When a firm becomes an enhanced scope SMCR firm
…
Meeting the qualification conditions in Part 9
10.3 R A firm meets one of the qualification conditions in Part 9 of this annex
(other qualification conditions) on the date when:
(1) the status in SYSC 23 Annex 1 9.1R(1) or SYSC 23 Annex 1.9.1R(2) becomes effective; or (as the case may be) … …
10.5 G Table: Date firm becomes an enhanced scope firm
Qualification condition Date firm becomes an enhanced scope SMCR firm The firm is a significant SYSC firm If a firm meets the criteria in SYSC 23 Annex 1 9.3R but does not at first meet the conditions for being a significant SYSC firm and then later becomes a significant SYSC firm, it becomes an enhanced scope SMCR firm one year and three months after the date in SYSC 1.5.2R (the three-month period in SYSC 1.5.5R(2) plus the one year in this Part). If a firm meets the conditions for being a significant SYSC firm but at first does not meet the criteria in SYSC 23 Annex 1 9.3R and then later meets those criteria, the three-month period in SYSC 1.5.5R(2) does not apply. The one-year period in this Part runs from the date the firm first meets the criteria in SYSC 23 Annex 1 9.3R. If a firm first meets the conditions for being a significant SYSC firm and the criteria in SYSC 23 Annex 1 9.3R at

FCA 202X/YY the same time, the three-month period in SYSC 1.5.5R(2) applies. … The firm opts to be an enhanced scope SMCR firm by notifying the FCA using Form O in accordance with SYSC 23
Annex 1.12 (Opting up
and opting back down)
…
10.6 G …
(2) For example, a core SMCR firm opting up to be an enhanced scope SMCR firm should use this period to apply for approval or make an SMF notification for its personnel to perform the new designated senior management functions that will apply because it has become an enhanced scope SMCR firm.
10.7 G …
(2) For example, a core SMCR firm that meets one of the qualification conditions condition for being an enhanced scope SMCR firm in SYSC 23 Annex 1 9.1R(1) or SYSC 23 Annex 1 9.1R(2) will remain as a core SMCR firm for one year after it meets the qualification condition. 23
Annex
1.11
Part Eleven: When a firm stops being an enhanced scope SMCR firm
12
Ceasing to meet the qualification conditions in Part 9
11.3 R A firm ceases to meet one of the qualification conditions condition in
SYSC 23 Annex 1 9.1R(1) or SYSC 23 Annex 1 9.1R(2) (other qualification conditions) on the date that the status in SYSC 23 Annex 1 9.1R ceases to apply.

FCA 202X/YY
…
23
Annex
1.12
Part Twelve: Opting up and opting back down
…
Giving notices
12.12 R (1) This rule deals with a notification under SYSC 23 Annex 1
12.1R to SYSC 23 Annex 1 12.6R.
…
(3) A firm must use the version of the form made available for this purpose on the electronic system referred to in SUP 10C.15.11R, which is based on the version found in SYSC 23
Annex 2R (Form O) include in the notification:
(a) the category of SMCR firm into which it currently falls; (b) (if applicable) the category up into which it is opting; (c) the category into which it will fall when the notification takes effect; (d) (if applicable) details of the opt-up which it is revoking; and (e) the information required by SUP 10C.15.15R. (4) If SUP 10C.15.11R requires the notification to be in accordance with SUP 10C.15.14R (Method of submission: other forms of submission), the firm must use the version of the form found in SYSC 23 Annex 2R. [deleted] … SYSC 23 Annex 2 (Form O: Changing firm status under the Senior Managers and Certification Regime) is deleted in its entirety. The deleted text is not shown but the annex is marked ‘[deleted]’ as shown below.

FCA 202X/YY
23
Annex 2
Form O: Changing firm status under the Senior Managers and Certification Regime [deleted] Amend the following as shown. 24 Senior managers and certification conduct rules regime: Allocation of prescribed responsibilities …
24.2 Allocation of FCA-prescribed senior management responsibilities: Main
allocation rules
…
24.2.3 R (1) A PRA-authorised person may not allocate an FCA-prescribed senior
management responsibility to an SMF manager who is only approved to perform the other overall responsibility function or the other local responsibility function for that firm, subject to (2). [deleted] (2) A PRA-authorised person may allocate FCA-prescribed senior management responsibility (z) in the table in SYSC 24.2.6R (functions in relation to CASS) to an SMF manager who is only approved to perform the other overall responsibility function or the other local responsibility function. 24.2.3A G (1) This provision applies to an FCA-authorised person. [deleted] (2) An FCA-prescribed senior management responsibility should be given to the SMF manager who is the most senior person responsible for the relevant activity or area (see SYSC 24.3.1G). In most cases this would not be an SMF manager who holds the other overall responsibility function or the other local responsibility function, given the nature of those designated senior management functions. (3) However, in some cases it may be appropriate for an SMF manager who is only approved to perform the other overall responsibility function or the other local responsibility function to hold an FCAprescribed senior management responsibility, for example if:
(a) the firm has unusual management arrangements; (b) the firm is allocating an FCA-prescribed senior management responsibility of an absent SMF manager (see SUP 10C.3A.20G (Re-allocation of prescribed responsibilities)); or

FCA 202X/YY
(c) the FCA-prescribed senior management responsibility is closely related to the overall or local responsibility allocated to them under SYSC 26.3.1R or SYSC 26.3.2R (Main rules), making them the most appropriate SMF manager to hold the FCAprescribed senior management responsibility. (4) Therefore, there will be circumstances when an FCA-authorised person may allocate an FCA-prescribed senior management responsibility to an SMF manager who is only approved to perform the other overall responsibility function or the other local responsibility function for that firm. … What the FCA-prescribed senior management responsibilities are …
24.2.6 R Table: FCA-prescribed senior management responsibilities
FCA-prescribed senior management responsibility Explanation Reference letter (1) Responsibility for the firm’s performance of its obligations under the senior managers regime, including the vetting of candidates to perform senior management functions The senior managers regime means the requirements of the regulatory system applying to SMCR firms insofar as they relate to SMF managers performing designated senior management functions, including SUP 10C (FCA senior managers regime for approved and notified persons). This responsibility includes:
(1) compliance with conditions and time limits on approval approvals and SMF notifications; (2) compliance with the requirements about the management responsibilities map and statements of responsibilities (but not the (a)

FCA 202X/YY allocation of responsibilities recorded in them); (3) compliance by the firm with its obligations under
section 60A of the Act
(Vetting of candidates by authorised persons); and (4) compliance by the firm with the requirements in SYSC 22 (Regulatory references) (and the corresponding PRA requirements) so far as they relate to the senior managers regime, including the giving of references to another firm about an SMF manager or former SMF manager.; (5) compliance by the firm with its obligations about applications for approval, SMF notifications and variations of approvals and SMF notifications, including under directions issued by the FCA and PRA about those matters; and (6) the PRA’s equivalent to the requirements in SUP 10C and (2) and (4). (2) Responsibility for the firm’s performance of its obligations under the certification regime [deleted] The certification regime means the requirements of sections 63E and 63F of the Act (Certification of employees) and all other requirements of the regulatory system about the matters dealt with in or relating to those sections, including:
(1) SYSC 27 (Senior managers and certification regime:
Certification Regime);
(2) the requirements in SYSC
22 (Regulatory references) so
(b)

FCA 202X/YY far as they relate to the certification regime, including the giving of references to another firm about a certification employee or former certification employee; and (3) the corresponding PRA requirements; and (4) the requirements in SUP
16.26 (Reporting of
information about Directory persons), which require a firm to report information to the FCA about its Directory persons. (3) Responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime … (d) (4) Responsibility for the firm’s obligations for:
[deleted]
(a) conduct rules training; and
(b) conduct rules reporting.
(1) The firm’s obligations for conduct rules training means its obligations under section 64B of the Act (Rules of conduct: responsibilities of authorised persons). (2) The firm’s obligations for conduct rules reporting means its obligations under section 64C of the Act (Requirement for authorised persons to notify regulator of disciplinary action). (b-1) (5) Responsibility for:
[deleted]
(a) leading the development of; and
(b) monitoring the effective implementation of; (f)

FCA 202X/YY policies and procedures for the induction, training and professional development of all members of the firm’s governing body. (6) Responsibility for monitoring the effective implementation of policies and procedures for the induction, training and professional development of all the firm’s: [deleted] (a) SMF managers; and (b) key function holders; other than members of the firm’s governing body. (1) Key function holder has the same meaning as it does in the Glossary Part of the PRA Rulebook. (2) Paragraph (b) of column (1) of this row (6) only applies to a firm if and to the extent that the PRA’s requirements about key function holders apply to it. (g) (7) Responsibility for:
[deleted]
(a) safeguarding the independence of; and (b) oversight of the performance of; the internal audit function, in accordance with the internal audit requirements for SMCR firms and the PRA requirements referred to in column (2) of this row (1) This responsibility includes responsibility for:
(a) safeguarding the independence of; and (b) oversight of the performance of; a person approved to perform the Head of Internal Audit function for the firm if that function applies to the firm. (2) This responsibility only applies if and to the extent that:
(a) the internal audit requirements for SMCR firms; or (b) any requirements of the PRA about the matters in paragraph (1) of this column of this row (7); apply to the firm. (3) Independence means independence to the extent it is required by the requirements (j)

FCA 202X/YY referred to in paragraph (2) of this column of this row (7). (4) The Head of Internal Audit function means the head of internal audit function or the PRA’s Head of Internal Audit designated senior management function. (8) Responsibility for:
[deleted]
(a) safeguarding the independence of; and (b) oversight of the performance of; the compliance function in accordance with the compliance requirements for SMCR firms. (1) This responsibility includes responsibility for:
(a) safeguarding the independence of; and (b) oversight of the performance of; the person performing the compliance oversight function for the firm. (2) This responsibility only applies if and to the extent that the compliance requirements for SMCR firms apply to the firm. (3) “Independence” means independence to the extent it is required by the compliance requirements for SMCR firms. (k) (9) Responsibility for:
[deleted]
(a) safeguarding the independence of; and (b) oversight of the performance of; the risk function, in accordance with the risk control requirements for SMCR firms and the PRA requirements referred to in column (2) of this row (9). (1) This responsibility includes responsibility for:
(a) safeguarding the independence of; and (b) oversight of the performance of; a person approved to perform the Chief Risk function for the firm if that function applies to the firm. (2) This responsibility only applies if and to the extent that:
(l)

FCA 202X/YY
(a) the risk control requirements for SMCR firms; or (b) any requirements of the PRA about the matters in paragraph (1) of this column of this row (9); apply to the firm. (3) “Independence” means independence to the extent it is required by the requirements referred to in paragraph (2) of this column of this row (9). (4) The Chief Risk function means the chief risk officer function or the PRA’s Chief Risk designated senior management function. (10) Responsibility for overseeing the development of and implementation of the firm’s remuneration policies and practices in accordance with SYSC 19D (Remuneration Code) [deleted] This responsibility does not apply to a firm to which SYSC 19D does not apply. (m) (11) Responsibility for the firm’s compliance with CASS … (z) (12) Responsibility for compliance with the requirements of the regulatory system about the management responsibilities map [deleted] (1) This responsibility does not include allocating responsibilities recorded in the management responsibilities map. (2) This responsibility does not apply to a firm to which the requirements about management responsibilities maps in SYSC 25 (Senior managers and certification regime: Management responsibilities maps and (c)

FCA 202X/YY handover procedures and material) do not apply. (13) Acting as the firm’s whistleblowers’ champion [deleted] (1) The whistleblowers’ champion’s allocated responsibilities are set out in SYSC 18.4.4R. (2) This responsibility does not apply to a firm that is not required to have a whistleblowers’ champion. (n) (14) Responsibility for:
[deleted]
(a) providing for an effective internal audit function in accordance with one of the sections of the PRA Rulebook listed in paragraph (2) of column (2) of this row (14); and (b) overseeing the performance of the internal audit function. (1) Only applies to a firm:
(a) that outsources its internal audit function to an external third party service provider; and (b) to which one of the following internal audit PRAprescribed senior management responsibilities applies:
(i) the responsibility in rule
3.3(1) in the Insurance –
Allocation of Responsibilities
Part of the PRA Rulebook; or
(ii) the responsibility in rule
3.2(1) in the Large NonSolvency II Firms – Allocation of Responsibilities Part of the PRA Rulebook. (2) The parts of the PRA Rulebook referred to in column (1) of this row (14) are:
(a) Solvency II firms -
Conditions Governing
Business 5; and
(b) Non-Solvency II Firms –
Governance 9.2.
(3) Terms used in column (1) of this row (14) have the same meaning as they do for the corresponding PRA-prescribed (j-2)

FCA 202X/YY senior management responsibility described in paragraph (1) of this column of this row (14). (15) Responsibility for management of the firm’s risk management processes in the UK [deleted] (aa) (16) Responsibility for the firm’s compliance with the UK regulatory system applicable to the firm [deleted] (ff) (17) Responsibility for the escalation of correspondence from the PRA, FCA and other regulators in respect of the firm to each of the governing body or the management body of the firm and, as appropriate, of the firm’s parent undertaking and the ultimate parent undertaking of the firm’s group [deleted] This includes taking steps to ensure that the senior management of the firm and, where applicable, the group, are made aware of any views expressed by the regulatory bodies and any steps taken by them in relation to the branch, firm or group. (ee) (18) Responsibility for taking reasonable steps to ensure that every person involved in the performance of the firm’s internal audit function is independent from the persons who perform external audit, including:
…
… (j-3)
(19) Responsibility for:
[deleted]
(a) managing the firm’s internal stress tests; and (b) ensuring the accuracy and timeliness of information provided to the FCA and other Stress testing refers to stress testing under MIFIDPRU 7.5 (ICARA process: capital and liquidity planning, stress testing, wind-down planning and recovery planning). (s)

FCA 202X/YY regulatory bodies for the purposes of stress testing. This responsibility only applies to a firm to which MIFIDPRU 7.5 applies. (20) The responsibilities allocated under COLL 6.6.27R, COLL 8.5.22R or COLL 15.7.24R (Allocation of responsibility for compliance to an approved person). [deleted] Only applies to a firm to which the rules in column (1) apply. (za) (21) Responsibility for the development and maintenance of the firm’s business model by the governing body. [deleted] Business model means the same thing as it does in
Schedule 6 to the Act
(Threshold Conditions).
This responsibility applies even if the business model threshold condition does not apply to it. (t)
24.3 Who prescribed responsibilities should be allocated to
Seniority and authority
24.3.1 G The FCA expects that a person who has responsibility for an FCA-prescribed
senior management responsibility:
(1) will generally (in the case of the FCA-prescribed senior management responsibilities in SYSC 24.3.3G(1)) be the most senior employee or officer responsible for managing that area (or the most senior below the chief executive); and … The SMF managers to whom FCA-prescribed senior management responsibilities should be allocated
24.3.2 G The FCA expects that normally a firm will allocate the FCA-prescribed senior
management responsibility with the following FCA reference letters (see column three of the table in SYSC 24.2.6R) to an SMF manager who is a nonexecutive director of the firm (or, in the case of a partnership, a partner without management responsibilities): [deleted] (1) (f) (development of members of governing body);

FCA 202X/YY
(2) (j) (internal audit oversight);
(3) (k) (compliance oversight);
(4) (l) (risk control oversight);
(5) (m) (remuneration code oversight); and (6) (n) (whistleblowers’ champion).
24.3.3 G Subject to the more detailed guidance in SYSC 24 Annex 2 (Preferred
allocations of FCA-prescribed senior management responsibilities), the FCA expects that normally a firm will allocate FCA-prescribed senior management responsibilities other than the ones referred to in SYSC 24.3.2G to an SMF manager who performs executive functions for the firm. … Exceptions for small non-complex firms
24.3.4 G (1) The FCA accepts that it may not be practical for a small non-complex
firm to comply with the parts of SYSC 24.3.1G(1), SYSC 24.3.2G and SYSC 24.3.3G that would otherwise apply to it. … … Dividing and sharing management functions between different people …
24.3.10 G …
(2) The firm should make the judgement:
… under:
…
(d) any other applicable Handbook requirements, including:
…
(iii) SYSC 3.1.6R, SYSC 4.1.1-AR, SYSC 5.1.1R, SYSC 5.1.6R, SYSC 5.1.12R, SYSC 5.1.13R and SYSC 5.1.14R.

FCA 202X/YY
…
…
24.3.11 G SUP 10C.11.31G to SUP 10C.11.33G (What statements of responsibilities
should contain: dividing and splitting responsibilities) SYSC 24A.4 (Dividing and splitting responsibilities) contains material about:
…
…
24
Annex 1
Which FCA-prescribed senior management responsibilities apply to which kind of firm 23
Annex
1.1
Introduction and exclusions
…
1.4 R The following FCA-prescribed senior management responsibilities do
FCA-prescribed senior management responsibility j-3 (independence of outsourced internal audit) does not apply to a full-scope UK AIFM in relation to its managing an AIF:. (1) responsibility (j) (internal audit oversight); (2) responsibility (k) (compliance oversight); (3) responsibility (l) (risk oversight); (4) responsibility (j-3) (independence of outsourced internal audit); and (5) responsibility (t) (business model). 23
Annex
1.2
Banking sector firms

FCA 202X/YY
2.1 R (1) The table in SYSC 24 Annex 1 2.3R sets out which FCAprescribed senior management responsibilities apply to which
type of an SMCR banking firm.
(2) SMCR firms in (1) are divided into the following categories for the purposes in (1):
(a) a UK SMCR banking firm (excluding firms in (b)); (b) a small UK SMCR banking firm; and (c) an overseas SMCR banking firm.
2.2 R A small UK SMCR banking firm means a UK SMCR banking firm that
is: [deleted]
(1) a small CRR firm as defined in the part of the PRA Rulebook called “Allocation of responsibilities”; or (2) a credit union.
2.3 R Table: FCA-prescribed senior management responsibilities applying to
banking sector firms
Brief description of responsibility
Reference letter of responsibility
UK firm
Small
UK firm
Overseas firm
Responsibility for the firm’s performance of its obligations under the senior managers regime (a) √ √ √ Responsibility for the firm’s performance of its obligations under the employee certification regime (b) √ √ √ Financial crime (d) √ √ √ COCON (b-1) √ √ √ Training governing body (f) √ × ×

FCA 202X/YY
Training of staff performing designated senior management responsibilities See Note (2) (g) √ × × Management responsibilities maps (c) √ √ √ Whistleblowers’ champion (n) √ √ × Internal audit oversight (j) √ × × Compliance oversight (k) √ × × Risk oversight (l) √ × × Remuneration (m) √ × × CASS (z) √ √ √ UK risk management (aa) × × √ Compliance with UK regulatory system (ff) × × √ Escalation of correspondence (ee) × × √ Note (1): the categories of firm in the column headings of this table are to be interpreted in accordance with the classification of firms in SYSC 24 Annex 1 2.1R. Therefore:
(a) column three (UK firm) refers to SYSC 24 Annex 1 2.1R(2)(a); (b) column four (Small UK firm) refers to SYSC 24 Annex 1 2.1R(2)(b); and (c) column five (Overseas firm) refers to SYSC 24 Annex 1 2.1R(2)(c). Note (2): Paragraph (b) of this FCA-prescribed senior management responsibility (key function holder) does not apply to any firm in this table. [Editor’s note: As well as the deletions in the table in SYSC 24 Annex 1 2.3R shown above, the table is reduced from 5 columns to 2 as shown.] 23
Annex
1.3

FCA 202X/YY
Insurance sector firms
3.1 R (1) The table in SYSC 24 Annex 1 3.2R sets out which FCAprescribed senior management responsibilities apply to which
type of SMCR insurance firm.
(2) SMCR firms in (1) are divided into the following categories for the purposes in (1):
(a) a Solvency II firm (excluding firms in any other paragraph); an SMCR insurance firm other than one in (e); and (b) a firm falling within paragraph (b) of the definition of Solvency II firm (undertaking that would require Part 4A permission as an insurance or reinsurance undertaking if its head office were situated in the United Kingdom); [deleted] (c) a small non-directive insurer; [deleted] (d) a firm in SYSC 23 Annex 1 5.2R (firms in run-off); and [deleted] (e) an insurance special purpose vehicle. (3) An insurance special purpose vehicle only falls into paragraph (2)(e). Subject to that, a firm in (2)(d) does not fall into any other paragraph. [deleted]
3.2 G References to a Solvency II firm include a large non-directive insurer.
[deleted]
3.3 R Table: FCA-prescribed senior management responsibility applying to
insurance sector firms
Brief description of responsibility
Reference letter of responsibility
Solvency
II firm
Insurance firm
Overseas branches
Other insurance sector
ISPV
Responsibility for the firm’s performance of its obligations under the senior (a) √ √ √ √

FCA 202X/YY managers regime
Responsibility for the firm’s performance of its obligations under the employee certification regime (b) √ √ √ √ Financial crime (d) √ √ √ √ COCON (b-1) √ √ √ √ Training governing body (f) √ × × × Training of staff performing designated senior management responsibilities (g) √ × × × Management responsibilities maps (c) √ √ × × Whistleblowers’ champion (n) √ × × × CASS (z) √ √ √ × Internal audit for nonsignificant insurers (j-2) √ × × × Compliance with UK regulatory system (ff) × √ × × Escalation of correspondence (ee) × √ × ×

FCA 202X/YY
Note: The categories of firm in the column headings of this table are to be interpreted in accordance with the classification of firms in SYSC 24 Annex 1 3.1R. Therefore:
(1) Solvency II firm Insurance firm (column three) refers to SYSC 24 Annex 1 3.1R(2)(a); and (2) Overseas branches (column four) refers to SYSC 24 Annex 1 3.1R(2)(b); [deleted] (3) Other insurance sector (column five) refers to SYSC 24 Annex 1 3.1R(2)(c) and (d); and [deleted] (4) ISPV (column six four) refers to SYSC 24 Annex 1 3.1R(2)(e). [Editor’s note: As well as the deletions in the table in SYSC 24 Annex 1 3.2R shown above, the table is reduced from 6 to 4 columns as shown.] 23
Annex
1.4
Solo regulated firms
4.1 R (1) The table in SYSC 24 Annex 1 4.2R sets out which FCAprescribed senior management responsibilities apply to which
type of a core SMCR firm and an enhanced scope SMCR firm.
(2) SMCR firms in (1) are divided into the following categories for the purposes of in (1):
(a) UK core SMCR firm; core SMCR firm; and (b) overseas core SMCR firm (excluding an EEA SMCR firm); and [deleted] (c) enhanced scope SMCR firm.
4.2 R Table: FCA-prescribed senior management responsibility applying to
solo regulated firms
(1)
Brief description of responsibility
(2)
Reference letter of responsibility
(3)
UK core
(4)
Overseas core firm
(5)
Enhanced scope firm

FCA 202X/YY
Core firm
Responsibility for the firm’s performance of its obligations under the senior managers regime (a) √ √ √ Responsibility for the firm’s performance of its obligations under the employee certification regime (b) √ √ √ Financial crime (d) √ √ √ COCON (b-1) √ √ √ Management responsibilities maps (c) × × √ Internal audit oversight (j) × × √ Compliance oversight (k) × × √ Risk oversight (l) × × √ CASS (z) √ √ √ Independence of outsourced internal audit (j-3) × × √ Business model (t) × × √ Stress tests (s) × × √ Allocation of responsibility for COLL compliance to an approved person (za) √ √ √ UK risk management (aa) × √ × Compliance with UK regulatory system (ff) × √ ×

FCA 202X/YY
Escalation of correspondence
(ee) × √ ×
Note: The categories of firm in the column headings of this table are to be interpreted in accordance with the classification of firms in SYSC 24 Annex 1 4.1R. Therefore:
(1) UK core Core firm (column three) refers to SYSC 24 Annex 1 4.1R(2)(a); and (2) Overseas core firm (column four) refers to SYSC 24 Annex 1 4.1R(2)(b); and [deleted] (3) Enhanced scope firm (column five four) refers to SYSC 24 Annex 1 4.1R(2)(c). [Editor’s note: As well as the deletions in the table in SYSC 24 Annex 1 4.2R shown above, the table is reduced from 5 to 4 columns as shown.] 24
Annex 2
Preferred allocations of FCA-prescribed senior management responsibilities Purpose 24
Annex
2.1
G This annex sets out detailed guidance on the FCA’s expectations about what designated senior management function an SMF manager should and not should not hold if a firm wishes to allocate particular FCA-prescribed senior management responsibilities to them. It should be read together with SYSC 24.3.2G and SYSC 24.3.3G (The SMF managers to whom FCA-prescribed senior management responsibilities should be allocated), and SYSC 24.3.4G and SYSC 24.3.5G (Exceptions for small non-complex firms). General material … 24
Annex
2.7
G If no one performs the chief executive function for a firm, it will usually be most appropriate for those FCA-prescribed senior management responsibilities that are listed in the tables in this annex as being appropriate for SMF 1 to go instead to the most suitable SMF manager:
…
(2) (in the case of a PRA-authorised person) into whose designated senior management function the functions in (1) have been absorbed under the arrangements in SUP 10C.9 (Minimising overlap with the PRA approved and notified persons regime).

FCA 202X/YY
Allocations for core SMCR firms
24
Annex
2.8
G The tables table in SYSC 24 Annex 2.10G and SYSC 24 Annex 2.11G cover covers core SMCR firms. 24
Annex
2.9
G The table in SYSC 24 Annex 2.11G covers FCA-prescribed senior management responsibilities that only apply to overseas SMCR firms. [deleted] 24
Annex
2.10
G Table: Combinations of designated senior management functions and FCAprescribed senior management responsibilities for core SMCR firms (1) FCA-prescribed senior management responsibility (2) SMFs most likely to be appropriate (3) Would generally consider harder to justify … (b) (Responsibility for performance of obligations under certification regime) SMFs 1, 19 SMFs 9, 16, 17 (b-1) (Responsibility for conduct rules) SMFs 1, 19 SMFs 9, 17 … (za) (COLL) SMF 9 There are also rules governing the allocation of this function (see COLL 6.6.27R, COLL 8.5.22R and COLL 15.7.24R). SMFs 1, 3, 16, 17, 27 … 24
Annex
2.11
G Table: Combinations of designated senior management functions and FCAprescribed senior management responsibilities only applicable to core SMCR firms that are overseas SMCR firms [deleted]

FCA 202X/YY
(1)
FCA-prescribed senior management responsibility (2) SMFs most likely to be appropriate (3) Would generally consider harder to justify (aa) (UK management processes) SMF 19 SMF 17 (ee) (Escalating correspondence) SMF 19 SMF 17 (ff) (Compliance with UK regulatory system) SMF 19 SMF 17 See the notes to the table in SYSC 24 Annex 2.10G for the meaning of the numerical and alphanumerical references in this table. Allocations for all other firms … 24
Annex
2.13
G Table: Combinations of designated senior management functions and FCAprescribed senior management responsibilities for all other SMCR firms (1) FCA-prescribed senior management responsibility (2) SMFs most likely to be appropriate (3) Would generally consider harder to justify (a) (Responsibility for performance of obligations under senior managers regime) … SMFs 5, 9-15, 16, 17, 18, 20, 20a, 22, 23 (b) (Responsibility for performance of obligations under certification regime) SMFs 1, 19, 25, 26 SMFs 5, 9-15, 16, 17, 18, 20, 20a, 22, 23 (b-1) (Responsibility for conduct rules) SMFs 1, 19, 25, 26 SMFs 5, 9-15, 17, 18, 20, 20a, 22, 23

FCA 202X/YY
(c) (Management responsibilities map)
SMFs 1, 19 SMFs 5, 9-15, 17,
18, 20, 20a, 22, 23
(d) (Financial crime) … SMFs 2, 5, 6, 9-15, 18, 20, 20a, 22, 23 (f) (Training of governing body) SMFs 9, 19 SMFs 1-6, 15-18, 20-24 (g) (Training of senior management) SMFs 1, 19 SMFs 2, 4, 5, 9-15, 18, 20, 20a, 22, 23, 24 (j) (Independence and oversight of internal audit) SMF 11 SMFs 1-6, 16, 17, 18, 22, 24, (j-2) (Outsourced internal audit where certain PRA rules apply) SMF 11 SMFs 1-6, 12-18, 20, 20a, 22, 23, 24 (j-3) (Outsourced internal audit) … SMFs 1-5, 12, 13, 16, 17, 18, 22, 24 (k) (Independence and oversight of compliance) SMF 10 SMFs 1-6, 16, 17, 18, 22, 24 (l) (Independence and oversight of risk function) SMF 10 SMFs 1-6, 16, 17, 18, 22, 24 (m) (Remuneration policy and practices) SMF 12 SMFs 1-6, 16, 17, 18, 20, 20a, 22, 23, 24 (n) (Whistleblowing) See SYSC 18.4.1G(4) SMFs 1-6, 16, 17, 18, 20, 20a, 22, 23, 24 (s) (Stress tests) SMFs 2, 4 SMFs 5, 9-14, 16, 17, 18, 22, 24 (t) (Development and maintenance of business model) SMFs 1, 25, 26 SMFs 5, 9-12, 14, 16, 17, 18, 20, 20a, 22, 23, 24 …

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(za) (COLL) SMF 9
There are also rules governing the allocation of this function (see COLL 6.6.27R, COLL 8.5.22R and COLL 15.7.24R). SMFs 1-5, 7, 16, 17, 18, 19, 22, 24 (aa) (UK management processes) SMF 4 SMFs 5, 17, 22, 24 (ee) (Escalating correspondence) SMF 19 SMFs 2, 4, 5, 9-12, 14, 17, 20, 20a, 22, 23, 24 (ff) (Compliance with UK regulatory system) SMF 19 SMFs 2, 4, 5, 9-12, 14, 17, 20, 20a, 22, 23, 24 … (3) SYSC 24.2.3R (Allocation of FCA-prescribed senior management responsibilities) means that (with the exception set out in that rule) only an enhanced scope SMCR firm may allocate an FCA-prescribed senior management responsibility to an SMF manager who is only approved to perform the other overall responsibility function or the other local responsibility function for that firm. References to SMF 18 and SMF 22 in this table should be interpreted accordingly. [deleted] Insert SYSC 24A after SYSC 24 (Senior managers and conduct rules regime: Allocation of prescribed responsibilities). The text is all new and is not underlined. 24A Senior managers and conduct rules regime: Statements of responsibilities 24A.1 Application and purpose Basic application rules 24A.1.1 R This chapter applies to an SMCR firm. 24A.1.2 R This chapter is not limited to regulated activities or other specific types of activities. 24A.1.3 R There is no territorial limitation on the application of this chapter.

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Exclusion for single manager
24A.1.4 R This chapter (other than SYSC 24A.7 (Past versions) and SYSC 24A.8 (Submission of statements of responsibilities to the FCA)) does not apply to a firm if and for as long as it only has a single SMF manager. 24A.1.5 R (1) When calculating the number of SMF managers a firm has, the following are included:
(a) an SMF manager who is temporarily absent; and (b) a person who is filling the role of a person who has ceased to be an SMF manager under SUP 10C.3A (The 18-week rule) or the PRA equivalent. (2) The ‘PRA equivalent’ to SUP 10C.3A means one of the PRA rules referred to in column 2 of row (6) of Part A of the table in COCON 1A.2.2R (Table: To whom does COCON apply?). (3) If the person filling the role described in (1)(b) is an SMF manager, they are counted twice: once in their capacity as an SMF manager and once under (1)(b). What this chapter covers 24A.1.6 G (1) This chapter is about the FCA’s requirements for statements of responsibilities. (2) In the case of a PRA-authorised person, it applies in respect of PRA-approved or notified SMF managers as well as FCAapproved or notified SMF managers, even if the PRA-approved or notified SMF manager is not subject to any current SMF approval or notification for an FCA-designated senior management function. Purpose 24A.1.7 G (1) One purpose of a statement of responsibilities is to help the firm and the FCA satisfy themselves precisely what responsibilities an SMF manager has. Together with the statements of responsibilities for the firm’s other SMF managers and the firm’s management responsibilities map (if the firm is required to have one), it helps the firm and the FCA to satisfy themselves that the firm has a clear organisational structure (as required by the regulatory system). (2) It also helps the FCA to identify who it needs to speak to about particular issues.

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(3) A statement of responsibilities helps the FCA to operate its powers and requirements for individuals. For example, it helps the FCA to:
(a) identify who is accountable if something goes wrong; and (b) understand the role or proposed role of the approved or notified person in the firm and, therefore, to judge how to use its powers under the regime for SMCR firms, such as the power to grant or refuse approval of an SMF manager or to amend, remove or impose conditions. 24A.2 Requirement to have a statement of responsibilities 24A.2.1 R A firm must have and maintain, for each of its SMF managers, a written, complete and up-to-date document setting out details of or about:
(1) each designated senior management function for which the SMF manager is subject to a current SMF approval or notification for the firm and any condition or time-limitation that applies to it; (2) any FCA-prescribed senior management responsibilities and (in the case of a PRA-authorised person) PRA-prescribed senior management responsibilities allocated to the SMF manager; (3) any responsibility for a function allocated to the SMF manager under SYSC 26 (Senior managers and conduct rules regime:
Overall and local responsibility) if that chapter applies to the firm; (4) (in the case of a PRA-authorised person) functions that are included in a PRA controlled function under the arrangements described in SUP 10C.9 (Minimising overlap with the PRA approved and notified persons regime); (5) all other responsibilities that the SMF manager has as an SMF manager, employee or officer of that firm and any other responsibility allocated by the firm to the SMF manager in relation to the firm; and (6) any sharing or division of a controlled function, FCA-prescribed senior management responsibility, PRA-prescribed senior management responsibility or other responsibility referred to in this rule. 24A.2.2 R (1) The document in SYSC 24A.2.1R is a statement of responsibilities. (2) A statement of responsibilities includes a statement amended under this section.

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24A.3 Drafting of a statement of responsibilities General approach to drafting a statement of responsibilities 24A.3.1 G A statement of responsibilities of an SMF manager should:
(1) show clearly how the responsibilities that the SMF manager performs fit in with the firm’s overall governance and management arrangements; (2) be consistent with the statement of responsibilities for the firm’s other SMF managers; and (3) be consistent with the firm’s management responsibilities map (if the firm is required to have one). (See SYSC 25.4.1G and SYSC 25.4.2G for more about this.) 24A.3.2 G (1) A statement of responsibilities should:
(a) be complete by itself;
(b) not refer to documents not forming part of it; and (c) only contain material about the matters that this chapter, and the corresponding PRA requirements (in the case of a PRA-authorised person) say should be included in it. (2) For example, if it is necessary to include relevant material from the firm’s report and accounts, the statement of responsibilities should not attach the whole of the report and accounts or cross refer to them. Instead, it should include a summary of the relevant part only. 24A.3.3 G A statement of responsibilities should be:
(1) practical and useable by the FCA;
(2) without unnecessary detail; and
(3) succinct and clear.
24A.3.4 G (1) SYSC or another part of the regulatory system will generally impose requirements (referred to as ‘prescribed requirements’ in this paragraph) that relate to a particular post or set of responsibilities. (2) For instance, these include:

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(a) the responsibilities that go with the FCA required functions; and (b) the FCA-prescribed senior management responsibilities and (in the case of a PRA-authorised person) the PRAprescribed senior management responsibilities. (3) The allocation of responsibilities under a statement of responsibilities should not reduce or alter the scope of any applicable prescribed requirements. (4) If:
(a) the responsibilities that the SMF manager carries out as described in the statement of responsibilities go beyond the prescribed requirements; or (b) the firm includes additional information about any prescribed requirements, the additional responsibilities or additional information should not reduce or alter the scope of the prescribed requirements, or dilute or undermine them. 24A.3.5 G (1) An example of the requirement that a firm’s statements of responsibilities for its SMF managers should be consistent (see SYSC 24A.3.1G) is that they should together demonstrate that there are no gaps in the allocation of responsibilities among the firm’s SMF managers. (2) A firm’s statements of responsibilities should be interpreted, where possible, so as to avoid any gaps in the allocation of responsibility for its activities among its SMF managers. (3) Paragraphs (1) and (2) apply to a firm to which SYSC 26 (Senior managers and conduct rules regime: Overall and local responsibility) applies. 24A.3.6 G (1) The definition of every designated senior management function contains a responsibility which is inherent, inseparable from and intrinsically built into the specific role. (2) In many ways, this inherent responsibility is the most important responsibility of any given SMF manager, as it provides a rationale as to why that specific function is subject to pre-approval by, or notification to, the FCA or PRA in the first place.

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(3) Even where an SMF manager has not been allocated any other responsibilities by the firm, the responsibility inherent in the definition of their designated senior management function means that they will be accountable for that aspect of the firm’s activities. (4) For instance, even if a person approved to perform the compliance oversight function has no other responsibilities allocated to them, they will be accountable for the Handbook requirements for the compliance oversight function. 24A.3.7 G (1) The FCA may request a firm to include specific responsibility for a regulatory outcome in the statement of responsibilities of the relevant SMF managers. (2) For example, where the FCA asks a firm to take remediation action following an internal or supervisory review or a report under
section 166 of the Act (Reports by skilled persons) and considers it
appropriate for an SMF manager to take responsibility for that action, it may ask the firm to add an additional, customised, explicit responsibility to the relevant SMF manager’s statement of responsibilities. Examples of things to be included 24A.3.8 G Other examples of things a statement of responsibilities of an SMF manager should contain include details about:
(1) responsibilities allocated under MIPRU 2.2 (Allocation of the responsibility for insurance distribution activity or MCD credit intermediation activity); (2) fulfilling or failing to fulfil a condition in relation to an approval or SMF notification; and (3) what performance of a responsibility referred to in a statement of responsibilities involves, including, for example, a breakdown of the different components and tasks which an FCA-prescribed senior management responsibility or (in the case of a PRAauthorised person) PRA-prescribed senior management responsibility allocated to the SMF manager encompasses. 24A.3.9 G (1) If the firm temporarily allocates an FCA-prescribed senior management responsibility, a PRA-prescribed senior management responsibility or an overall or local responsibility (as defined in SYSC 26.3.3R (Main rules)) allocated to an absent SMF manager to another SMF manager, the firm should record that allocation in:

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(a) the statement of responsibilities for that absent SMF manager; and (b) the statement of responsibilities of the SMF manager to which the responsibility is allocated. (2) The firm should also record the re-allocation of those responsibilities on the return of the SMF manager. 24A.4 Dividing and splitting responsibilities 24A.4.1 G (1) Where a responsibility or function is shared or divided between an SMF manager and others, the statements of responsibilities for each SMF manager concerned should:
(a) make this clear; and
(b) make it clear for what part of which responsibility or function that SMF manager has responsibility. (2) Together, the statements of responsibilities for a firm’s SMF managers should show which responsibility or function is shared or divided between which SMF managers and, if applicable, between which SMF managers and other persons. It should be clear which responsibility or function and which SMF managers or other persons are involved. 24A.4.2 G (1) Where:
(a) an FCA-prescribed senior management responsibility or PRA-prescribed senior management responsibility is divided or shared between several SMF managers; or (b) any function allocated under SYSC 26 (Senior managers and conduct rules regime: Overall and local responsibility) is shared between several SMF managers (if that chapter applies to the firm), the statement of responsibilities for each SMF manager should explain why this has been done and give full details of the arrangements, including the names of the other SMF managers and their FCA/PRA Individual Reference Numbers (IRN). (2) Where a responsibility or function is shared between several SMF managers, this should be recorded in the same way in the statements of responsibilities of each of them. This should also be consistent with the firm’s management responsibilities map.

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24A.4.3 G (1) Where 2 or more SMF managers share a responsibility, each will be individually responsible for everything included in that responsibility, including anything inherent in that responsibility (see SYSC 24A.3.6G for inherent responsibilities). (2) Where:
(a) a responsibility is divided between several SMF managers; but (b) some part of the responsibility has not clearly been allocated to any of them, it should be assumed that that part is the joint responsibility of all of them. 24A.5 Revised statements of responsibilities 24A.5.1 G SYSC 24A.2.1R requires a firm to keep a statement of responsibilities up to date. That means that a firm should immediately revise it to reflect changes in the matters referred to in SYSC 24A since the last time the firm updated it (and not just significant changes). This is the case even if that latest version does not have to be sent to the FCA or the PRA. 24A.6 One document for each SMF manager for each firm 24A.6.1 G A firm should prepare statements of responsibilities (including revised ones) for one of its SMF managers as a single document covering all the information required by this chapter. 24A.6.2 G If a person is an SMF manager for several firms in a group that are SMCR firms, there should be a separate document for each firm. 24A.6.3 G There should be a separate document for each SMF manager in a firm. A firm should not combine statements of responsibilities for several SMF managers. 24A.7 Past versions 24A.7.1 R (1) A firm must retain each version of a statement of responsibilities for:
(a) 6 years in the case of:
(i) an FCA-authorised person; or
(ii) an SMCR insurance firm other than a Solvency II firm; or

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(b) (in any other case) 10 years, from the date on which it was superseded by a more up-to-date version. (2) For the purpose of (1), a large non-directive insurer is treated as being subject to the 6-year requirement in (1)(a)(ii). 24A.7.2 R A firm must be able to provide the FCA immediately on request any of its statements of responsibilities and any version retained in accordance with this section. 24A.7.3 G (1) A firm should consider past versions of its statements of responsibilities as an important part of its records and as an important resource for the FCA in supervising the firm. (2) Past versions of a firm’s statements of responsibilities form part of its records under the regulatory system. 24A.7.4 G If the obligation to have and maintain statements of responsibilities ceases to apply to a firm under SYSC 24A.1.4R (Exclusion for single manager) because the number of its SMF managers falls to one:
(1) the firm should keep each statement of responsibilities current at the time the exclusion began to apply for 6 or 10 years, as applicable; (2) SYSC 24A.7.1R(1) continues to apply to previous versions; and (3) SYSC 24A.7.2R and SYSC 24A.7.3G apply to the versions referred to in (1) and (2). 24A.8 Submission of statements of responsibilities to the FCA 24A.8.1 G There is no requirement automatically to send the FCA a copy of a statement of responsibilities when it is first prepared or when it is amended. 24A.8.2 G The part of the FCA’s website covering SMCR applications and notifications explains whether and when a firm should send a statement of responsibilities to the FCA when it is applying for the FCA’s approval under section 59 of the Act (Approval and notification for particular arrangements), making an SMF notification or applying for the addition, variation or removal of a condition or time limit relating to an approval or SMF notification. 24A.8.3 G Unless otherwise stated in the relevant direction and subject to SYSC 24A.8.4G, the version of a statement of responsibilities to be sent to the

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FCA with an application or notification is a copy of the most up-to-date version of the firm’s internal copy. 24A.8.4 G (1) SYSC 25.4.16G to SYSC 25.4.18G (Submission to the FCA) apply to a statement of responsibilities to be sent to the FCA as described in SYSC 24A.8.2G as they do to a management responsibilities map to be sent to the FCA. (2) Therefore, for example, if:
(a) the statement of responsibilities of an existing SMF manager is being sent to the FCA along with an application for approval or an SMF notification under section 59 of the Act (Approval and notification for particular arrangements) for the performance of another designated senior management function for the firm; and (b) the SMF manager will cease to perform a designated senior management function if the approval is given or when the SMF notification takes effect, the version of the statement of responsibilities sent to the FCA should set out the designated senior management functions that the SMF manager will be performing after the approval or notification and omit the one that the SMF manager will cease to perform. 24A.8.5 G (1) If, under SYSC 24A.1.4R (Exclusion for single manager), a firm does not have to have statements of responsibilities, it will still have to prepare one if it is directed to submit a statement of responsibilities with an application or SMF notification to the FCA. (2) If:
(a) SYSC 25.1.2AR means that a firm is not required to have statements of responsibilities; (b) the firm is making an application or SMF notification to the FCA; and (c) the direction applying to the application or notification says that a firm does not have to submit a document that it would not otherwise be required to have but for the direction, the firm should still submit one.

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(3) The reason for (2) is that a reference in such a direction to such an exemption is not to SYSC 25.1.2AR unless the direction clearly says otherwise. 24A.9 Other material about the content of statements of responsibilities PRA requirements 24A.9.1 G A PRA-authorised person may combine a statement of responsibilities with the document required by the equivalent PRA rules. 24A.9.2 G In the case of a PRA-authorised person, the regulators’ requirements are designed to be consistent with each other’s. Exclusion of inherent responsibilities 24A.9.3 G In general, the FCA expects a statement of responsibilities should not set out details about the inherent responsibilities of a role (for inherent responsibilities, see SYSC 24A.3.6G (Drafting of a statement of responsibilities)). 24A.9.4 G (1) SYSC 24A.9.6G is an example of the principle in SYSC 24A.9.3G. (2) COLL 6.6.27R (Allocation of responsibility for compliance to an approved or notified person) provides another example. (3) COLL 6.6.27R says that if the chair of the AFM’s governing body is an approved or notified person, the AFM should allocate the responsibilities referred to in that rule to the chair. The FCA expects that the statement of responsibilities of the chair will not include those COLL responsibilities because the Handbook automatically assigns them to the chair. (4) On the other hand, if the chair of the AFM’s governing body is not an approved or notified person, COLL 6.6.27R says that the firm should allocate those COLL responsibilities to any appropriate approved or notified person chosen by the firm. In that case, the statement of responsibilities of the SMF manager to whom those responsibilities are allocated should include them. Non-executive directors 24A.9.5 G In general, the FCA expects the statement of responsibilities of a nonexecutive director who is an SMF manager to be less extensive than those of an executive SMF manager. 24A.9.6 G In line with the principle in SYSC 24A.9.3G, the general duties of a nonexecutive director described in section 2 of COCON 1A Annex 1 (The

FCA 202X/YY general role of a NED) should generally not be included in a nonexecutive director’s statement of responsibilities. Amend the following as shown. 25 Senior managers and certification conduct rules regime: Management responsibilities maps and handover procedures and material
25.1 Application and purpose
Main application rules
…
25.1.2 R …
Exclusion for single manager
25.1.2A R (1) This chapter (other than SYSC 25.4.15G to SYSC 25.4.19G (Submission to the FCA), SYSC 25.8 (Management responsibilities maps: Records) and SYSC 25.9 (Handover procedures and material)) does not apply to a firm if and for as long as it only has a single SMF manager. (2) When calculating the number of SMF managers a firm has, the following are included:
(a) an SMF manager who is temporarily absent; and (b) a person who is filling the role of a person who has ceased to be an SMF manager under SUP 10C.3A (The 18-week rule) or the PRA equivalent. (3) The PRA equivalent to SUP 10C.3A means one of the PRA rules referred to in column 2 of row (6) of the table in COCON 1A.2.2R (Table: To whom does COCON apply?). (4) If the person filling the role described in (2)(b) is an SMF manager, they are counted twice: once in their capacity as an SMF manager and once under (2)(b). … Purpose
25.1.6 G …

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(3) The management responsibilities map helps the FCA to operate its powers and requirements for individuals. For example, it helps the FCA:
…
(b) to understand the role of the approved person approved or notified person (or candidate) in the firm and, therefore, to judge how to use its powers under the regime for SMCR firms, such as the power to grant or refuse approval of an SMF manager or to amend or impose conditions.
25.2 Management responsibilities maps: Main rules
General rule
25.2.1 R (1) A UK SMCR firm must, at all times, have and maintain a
comprehensive and up-to-date document (the management responsibilities map) that describes its management and governance arrangements. (2) An overseas SMCR firm must, at all times, have and maintain a comprehensive and up-to-date document (the management responsibilities map) that describes the management and governance arrangements for any branch it maintains in the United Kingdom. … … Specific requirements
25.2.3 R A management responsibilities map must include (without limitation):
(1)
(a) the names of all the firm’s:
(i) approved persons approved or notified persons (including PRA approved persons PRA approved or notified persons); (ii) non-SMF board directors and members of its governing body and (if different) management body who are not approved persons approved or notified persons; …

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(b) details a summary of the responsibilities which they hold, including, where applicable, of all responsibilities described in any current statement of responsibilities; (2) all responsibilities described in any current statement of responsibilities a summary of other information in its current statements of responsibilities; (2A) details of reporting lines and lines of responsibility for each person listed pursuant to (1); (2B) where any responsibilities covered by (1) are performed by or allocated to more than 1 person, details of how those responsibilities are shared or divided between the persons concerned; … (4) the reasons why (if it has done any of these things) the firm: [deleted] (a) allocates responsibility for an FCA-prescribed senior management responsibility to more than one person jointly; or (b) divides responsibility for an FCA-prescribed senior management responsibility between different persons; (5) details about the functions allocated under, SYSC 26 (Senior managers and certification conduct rules regime: Overall and local responsibility), including:
…
…
(10) reasonable information about the persons described or identified in the management responsibilities map, including:
(a) whether they are employees of the firm and, if not, by whom they are employed; and (b) if they are certification employees of the firm; and [deleted] (c) the responsibilities they have in relation to other group members or any other person in (8); and (11) details of how (1) to (10) fit together and fit into the firm’s management and governance arrangements as a whole. …

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25.4 Guidance about what should be in a management responsibilities map
Material applicable to all firms
…
25.4.3 G The management responsibilities map should include functions that are:
(1) included in a PRA controlled function under the PRA rules complementing SUP 10C.9 (Minimising overlap with the PRA approved and notified persons regime) (as listed in SUP 10C.9.6G(2));. (2) excluded from the other overall responsibility function under SUP 10C.7.1R(2) (Exclusion for approved person with approval to perform other designated senior management functions); or (3) excluded from the other local responsibility function under SUP 10C.8.1R(2) (Exclusion for approved person with approval to perform other designated senior management functions). …
25.4.7 G …
25.4.7A G SYSC 25.2.3R(1) requires a firm to include details from the statements of responsibilities of its SMF managers in a consolidated form. That means, for example, that a management responsibilities map should include the reasons why (if it has done any of these things) the firm:
(1) allocates responsibility for an FCA-prescribed senior management responsibility or PRA-prescribed senior management responsibility to more than 1 person jointly; or (2) divides responsibility for an FCA-prescribed senior management responsibility or PRA-prescribed senior management responsibility between different persons.
25.4.8 G A firm should only include summary details about statements of
responsibilities under SYSC 25.2.3R(2) SYSC 25.2.3R(1). There is no need to duplicate the statements of responsibilities. The main aim of including material about statements of responsibilities in the management responsibilities map is to show how that material:
…
…

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25.4.10 G If:
…
(2) any FCA-prescribed senior management responsibility or PRAprescribed senior management responsibility is allocated to; more than one person, a firm’s management responsibilities map should give details of how the performance or discharge of the responsibilities is to be carried out by those persons.
25.4.11 G The executive director function, the other local responsibility function, the
group entity senior manager function, and the partner function and the other overall responsibility function are defined generally and generically and can be performed by several people. Therefore, there is no need to explain why several people perform one of the functions.
25.4.12 G The material in SUP 10C.11.31G and SUP 10C.11.32G (recording sharing
and splitting of responsibilities in statements of responsibilities) SYSC 24A.4 (Dividing and splitting responsibilities) also applies to a management responsibilities map. …
25.4.14 G …
Submission to the FCA
25.4.15 G The part of the FCA’s website covering SMCR applications and notifications
explains whether and when a firm should send a management responsibilities map to the FCA when it is applying for the FCA’s approval under section 59 of the Act (Approval and notification for particular arrangements), making an SMF notification or applying for the addition, variation or removal of a condition or time limit relating to an approval or SMF notification.
25.4.16 G Unless otherwise stated in the direction under which it is sent, if a firm is
sending a copy of its management responsibilities map to the FCA along with an application or SMF notification as referred to in SYSC 25.4.15G, it should send a copy of the most up-to-date version of the firm’s internal copy. This is subject to SYSC 25.4.17G and SYSC 25.4.18G.
25.4.17 G If a firm is sending a copy of its management responsibilities map to the FCA
along with an application or notification as referred to in SYSC 25.4.15G, that copy should set out the management arrangements that the firm plans to have in place if the approval is granted or when the notification takes effect, unless otherwise stated in the direction under which it is sent.

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25.4.18 G (1) This provision deals with a firm if it is directed to submit a
management responsibilities map with an application or notification to the FCA and applies unless otherwise stated in the relevant direction. (2) A firm may make a number of closely linked changes to its senior management arrangements of which the application is part. The firm should not submit a different version of the management responsibilities map showing the position after each change. Instead, in accordance with the principle in SYSC 25.4.17G, the firm should produce a single version showing the position after all the relevant changes have been carried out. (3) A series of changes may be linked because some are conditional on the others going ahead. However, changes can be linked in other circumstances, too. (4) The following are examples of closely linked changes as part of a reorganisation project:
(a) the firm intends to appoint a number of new SMF managers; (b) the firm intends to appoint a number of existing SMF managers to perform new designated senior management functions; or (c) the firm re-allocates responsibilities among its SMF managers. (5) If there is a significant time gap between linked changes, the FCA would expect the firm to produce a single version of the management responsibilities map for each phase of the changes.
25.4.19 G (1) If, under SYSC 25.1.2AR (Exclusion for single manager), a firm does
not have to have a management responsibilities map, it will still have to prepare one if it is directed to submit a management responsibilities map with an application or SMF notification to the FCA. (2) If:
(a) SYSC 25.1.2AR means that a firm is not required to have a management responsibilities map; (b) the firm is making an application or SMF notification to the FCA; and

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(b) the direction applying to the application or notification says that a firm does not have to submit a management responsibilities map if it is exempt from having one; the firm should still submit one. (3) The reason for (2) is that a reference in such a direction to an exempt firm is to a firm to which the management responsibilities map provisions of this chapter do not apply under SYSC 25.1.1R (Main application rules) and not to SYSC 25.1.2AR unless the direction clearly says otherwise. …
25.7 Guidance about SYSC 25 Annex 1G
…
Purpose of SYSC 25 Annex 1G
…
25.7.3 G As mentioned in SYSC 26.11.2G, a firm may also use SYSC 25 Annex 1G as a
prompt when allocating responsibilities under SYSC 26 (Senior managers and certification conduct rules regime: Overall and local responsibility).
25.7.4 G If a firm uses SYSC 25 Annex 1G to help it prepare its management
responsibilities map or when allocating responsibilities under SYSC 26 (Senior managers and certification conduct rules regime: Overall and local responsibility), it should bear in mind that it is not comprehensive and that there may be other business activities and functions that are relevant to that firm but that are not included in SYSC 25 Annex 1G (see SYSC 25.7.8G). …
25.8 Management responsibilities maps: Records
…
25.8.3 R (1) This rule applies to a Solvency II firm (including a large non-directive
insurer) to which SYSC 25.1.1R(2) (Main application rules) applies. [deleted] (2) A firm must retain each version of its management responsibilities map for:
(a) (in the case of a large non-directive insurer) six years; or in the case of:

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(i) an FCA-authorised person; or
(ii) an SMCR insurance firm other than a Solvency II firm, (b) (in any other case) ten years; from the date on which it was superseded by a more up-to-date version. (3) A firm must be prepared to provide each version to the FCA on request for as long as the firm is required to retain it. For the purpose of (2), a large non-directive insurer is treated as being subject to the 6-year requirement in (2)(a)(ii).
25.8.4 R A firm must be able to provide the FCA immediately on request with its
management responsibilities map and any version retained in accordance with this section.
25.8.5 G If the obligation to have and maintain a management responsibilities map
ceases to apply to a firm under SYSC 25.1.2AR (Exclusion for single manager) because the number of its SMF managers falls to one:
(1) the firm should keep the version of the management responsibilities map current at the time the exclusion began to apply for 6 or 10 years, as applicable; (2) SYSC 25.8.3R(2) continues to apply to previous versions; and (3) SYSC 25.8.1G, SYSC 25.8.2G and SYSC 25.8.4R apply to the versions referred to in (1) and (2). … 25
Annex 1
Examples of the business activities and functions of an SMCR firm Business areas and management functions Explanation … (28) Administration of insurance [deleted] This means the activity described in SYSC 27.8.5G(1)(k) (examples of what the significant management FCA certification function can cover).

FCA 202X/YY
(29) Issuing commitments
This means the activity described in SYSC 27.8.5G(1)(i) (examples of what the significant management FCA certification function can cover) making material decisions on the commitment of the firm’s financial resources, its financial commitments, its assets and acquisitions, its liability management or its overall cash and capital planning. (30) Processing This means the activity described in SYSC 27.8.5G(1)(j) (examples of what the significant management FCA certification function can cover) processing confirmations, payments, settlements, insurance claims, client money and similar matters. … 26 Senior managers and certification conduct rules regime: Overall and local responsibility …
26.2 Purpose
26.2.1 G The purpose of this chapter is to ensure, together (in the case of a PRAauthorised person) with the equivalent PRA requirements and the
requirements about FCA-prescribed senior management responsibilities in SYSC 24 (Senior managers and certification conduct rules regime:
Allocation of prescribed responsibilities) and (in the case of a PRAauthorised person) with the PRA-prescribed senior management responsibilities, that:
…
…
26.4 Exclusions
Exclusions where other requirements apply …
26.4.2 R SYSC 26.3 (Main rules) does not require a firm to ensure that SMF
managers have local or overall responsibility for any activity, business area or management function that is:
…

FCA 202X/YY
(2) managed (as part of the PRA-designated senior management function concerned) by any of the firm’s SMF managers approved or notified to perform any of the following PRA-designated senior management functions for the firm:
…
(f) the Approved Group Entity Senior Manager function or the Notified Group Entity Senior Insurance Manager function. Exclusion of the governing body and non-executive directors …
26.4.5 G …
(2) Paragraph (1) and SYSC 26.4.4G mean that a non-executive director acting as such does not have overall or local responsibility for a function under SYSC 26.3 or perform the other overall responsibility function or the other local responsibility function. (3) Paragraph (1) and SYSC 26.4.4G mean that a non-executive director:
(a) providing oversight of a function; or (b) being responsible for the independence of a function; does not have overall or local responsibility for that function under this chapter or perform the other overall responsibility function or the other local responsibility function. Exclusion where the 12-week 18-week rule applies
26.4.6 R (1) This rule applies where:
(a) a firm appoints someone to perform a function in order to provide cover as described in SUP 10C.3A.6R(1) (The 12- week 18-week rule) or (in the case of a PRA-authorised person) the PRA equivalent; and … … (3) For the purposes of this rule, the PRA equivalent of:

FCA 202X/YY
(a) SUP 10C.3A.6R is the following parts of the PRA Rulebook:
listed in row (6) of Part One of the table in COCON 1A.2.2R (Table: To whom does COCON apply?). (i) rule 2.3 in “Senior Management Functions”; (ii) rule 2.4 in “Insurance - Senior Management Functions”; and (iii) rule 2.4 in “Large Non-Solvency II Firms – Senior Management Functions”. … …
26.4.8 G SYSC 26.4.6R and SUP 10C.3A.6R apply to a person performing the other
overall responsibility function or the other local responsibility function as well as to a person performing one of the other designated senior management functions. [deleted] Exclusion of the legal function …
26.4.14 G SUP 10C.7.1R and SUP 10C.8.1R exclude the person with overall
responsibility for the legal function from the other overall responsibility function (SMF18) and the other local responsibility function (SMF22). [deleted]
26.4.15 G The exclusions in SYSC 26.4.9R(2), and SYSC 26.4.11R and SYSC 26.4.14G
do not affect the scope of the following or the obligation to appoint an SMF manager to carry them out:
(1) any FCA-designated senior management function other than the ones in SYSC 26.4.14G; or (2) any of the FCA-prescribed responsibilities. …
26.6 Meaning of local and overall responsibility: General
…
Day-to-day or ultimate control

FCA 202X/YY
26.6.6 G Having overall or local responsibility under this chapter for a matter does
not necessarily mean:
(1) having ultimate authority over it; or (2) having day-to-day management control of that function.; or (3) detailed operational involvement in the execution of the activity.
26.6.7 G …
26.6.8 G It is consistent with this chapter for an SMF manager exercising overall
responsibility or local responsibility:
(1) to rely on delegated management structures; and (2) to exercise that responsibility primarily through governance, oversight and escalation mechanisms.
26.7 Meaning of local and overall responsibility: Reporting to the governing body
…
26.7.3 G In general, the FCA expects that a person to whom overall responsibility for
a function is allocated as described in SYSC 26.7.1G will be the most senior employee or officer responsible for managing or supervising that function under the management of the governing body. However, it is consistent with that for:
(1) significant elements of that function to be managed by individuals in the management layer below; and (2) those individuals to exercise substantial autonomy within defined parameters. …
26.8 Meaning of local and overall responsibility: Not reporting to the governing
body
…
Branches: Setting overall strategy for a branch
26.8.3 G …
(2) See SUP 10C.1.5AG for more about how the difference between strategic and implementing responsibilities affects the FCA senior

FCA 202X/YY managers regime for approved persons approved or notified persons in overseas SMCR firms. …
26.8.5 G …
Meaning of seniority
26.8.6 G It is consistent for a person to be the most senior in a firm as referred to in
SYSC 26.8.3G(1)(b) and SYSC 26.8.5G even if:
(1) significant elements of the function for which that person has responsibility are managed by individuals in the management layer below; and (2) those individuals exercise substantial autonomy within defined parameters.
26.9 Who functions should be allocated to
Seniority
…
26.9.3 G Other parts of this chapter dealing with seniority are:
…
(2) SYSC 26.8.3G and SYSC 26.8.4G (seniority of someone from elsewhere in the firm having local responsibility in a branch); and (3) SYSC 26.8.5G (seniority of someone within a UK SMCR firm with overall responsibility for a function not under the management of a firm’s governing body).; and (4) SYSC 26.8.6G (meaning of seniority). Not giving too much responsibility to one individual
26.9.4 G (1) It will be common for a small non-complex firm to divide overall or
local responsibility for its activities under the management of its governing body between members of its governing body and not to assign overall or local responsibility for any activity to someone who is not a member. [deleted] (2) However, when When deciding how to divide up overall or local responsibility for its activities, a firm should avoid assigning such a

FCA 202X/YY wide range of responsibilities to a particular person that the person is not able to carry out those responsibilities effectively. (3) Therefore, in a large or complex firm, the FCA expects overall or local responsibility for some functions to be assigned to persons in the layer of management below the governing body. Anyone in that layer having overall or local responsibility for an activity will be performing a designated senior management function. that it will only be appropriate to allocate overall responsibilities or local responsibilities for a wide range of matters to an SMF manager if:
(1) the firm has robust delegation structures; and (2) the SMF manager is able to discharge their responsibilities through effective reliance on those structures. …
26.10 Group management arrangements and outsourcing
26.10.1 G …
(3) A firm has two main choices about how to fit such arrangements into the senior managers regime for SMCR firms. (a) The group employee is appointed by the firm (usually by its governing body if it has one) to perform the function. This means that the firm will have entered into an arrangement with that person. As explained in SUP 10C.3.9G, an arrangement with the firm is one of the factors that makes the senior managers regime for SMCR firms apply. The result is that the group official will be performing a controlled function and will need to be approved or notified as an SMF manager. (b) The firm appoints someone (A) to supervise what the group employee does (so far as it concerns the firm) and allocates responsibility for the function to A, leaving day-to-day activities to the group employee. A will need to be approved or notified as an SMF manager. (4) Where a firm adopts the model in (3)(b):
(a) it is consistent with SYSC 26 for the SMF manager’s role to be primarily one of oversight, rather than direct management; and

FCA 202X/YY
(b) the FCA would not expect the SMF manager to duplicate the functions performed by the delegate. …
26.10.3 G (1) This chapter does not cover responsibility for an aspect of a PRAauthorised person’s affairs managed by an individual approved or
notified to perform the Approved Group Entity Senior Manager or the Notified Group Entity Senior Insurance Manager PRAdesignated senior management function (see SYSC 26.4.2R (Exclusions where other requirements apply)). … …
26.11 Link between this chapter and other parts of the senior managers regime
Link between designated senior management functions and this chapter
26.11.1 G (1) Having overall or local responsibility for an activity under this
chapter requires approval as an SMF manager. This is because this
chapter requires a person who has overall or local responsibility for
an activity will to be: an SMF manager of the firm.
(a) performing the other overall responsibility function or the other local responsibility function; or (b) approved to perform another designated senior management function. (2) The other overall responsibility function applies because this is the effect of SUP 10C.7.1R (definition of other overall responsibility function). (3) SUP 10C.7.1R(2) says that the other overall responsibility function does not apply to a person who is approved to perform another designated senior management function. (4) The other local responsibility function applies because this is the effect of SUP 10C.8.1R (Definition of the other local responsibility function (SMF22)). (5) SUP 10C.8.1R(2) says that the other local responsibility function does not apply to a person who is approved to perform another designated senior management function in relation to the branch.

FCA 202X/YY
…
SYSC 27 (Senior managers and certification regime: Certification regime) is deleted in its entirety. The deleted text is not shown but the chapter is marked ‘[deleted]’ as shown below. 27 Senior managers and certification regime: Certification regime [deleted] Amend the following as shown. TP 5 Financial Services (Banking Reform) Act 2013: Certification and regulatory references TP 5 Note to the reader 5.1.1- 2 G (1) SYSC TP 5 has not been amended to reflect changes in the FCA Handbook and Glossary since the beginning of 2018 (except for editorial amendments made to reflect the deletion of certain Glossary terms). This is because it is made up of transitional provisions that mostly expired before then. (2) … (3) In SYSC TP 5, unless otherwise specified, the following terms should be read as they had effect in the Handbook Glossary on 10 December 2018, subject to any modifications specified below:
(a) ‘approved person’, and where the context requires, references to approved person include approved or notified person; (b) ‘certification employee’; (c) ‘certification function’; and (d) ‘FCA certification function’. 5.1.1- 1 G Table: meaning of superseded Glossary terms Term in SYSC TP 5 Term that has replaced it Comment

FCA 202X/YY
FCA specified significant-harm function
FCA certification function FCA certification function … specified significant-harm function certification function certification function Purpose of SYSC TP 5 … Certification: The transitional period … SYSC 5.3.2 G However, other parts of the Handbook and the Act about certification employees certification employees apply in the transitional period. SYSC 5.3.3 G The table in SYSC TP 5.3.4G explains how the requirements of the Handbook and the Act about certification employees certification employees apply in the transitional period. SYSC 5.3.4 G Table: How the certification regime applies in the transitional period Provision in the Act or the Handbook What that provision is about How it applies in the transitional period Definition of certification employee certification employee During the transitional period, the Glossary definition of certification employee certification employee covers everyone who would need a certificate to perform their job if the obligation to issue certificates was in force … The parts of SYSC 4.5 dealing with the SYSC 4.5 says that the management responsibilities map should …

FCA 202X/YY management responsibilities map say if persons described or identified in the management responsibilities map are certification employees certification employees … Transitional provisions about regulatory references: Full scope regulatory reference firms …
5.4.2 R SYSC 22.2.1R (Obligation to obtain a regulatory reference) does not
apply to an application for approval as an approved person approved person that is made before 7 March 2017 but that has not yet been finally determined by that date. SYSC 5.4.3 G … (4) The main difference between the requirements for a firm that is not a full scope regulatory reference firm before and after 7 March 2017 is that the range of functions for which A is entitled to ask for a reference was widened. For example, there was no obligation to supply a reference for a certification employee certification employee before then. … … TP 7 Bank of England and Financial Services Act 2016: Certification and regulatory references TP 7 Note to the reader 7.1.-1 G SYSC TP 7 has not been amended since 29 July 2022, other than editorial amendments made to reflect the deletion of certain Glossary terms. In SYSC TP 7, unless otherwise specified, the following terms

FCA 202X/YY should be read as they had effect in the Handbook Glossary on 29 July 2022, subject to any modifications specified below:
(1) ‘approved person’, and where the context requires, references to approved person include approved or notified person; (2) ‘certification employee’; and (3) ‘FCA certification function’. …
7.2 Certification: The certification transitional period
7.2.1 G Under the commencement SIs, the obligation in section 63E(1) of the
Act for an SMCR firm to take reasonable care to ensure that no employee of the firm performs an FCA certification function FCA certification function, unless the firm has issued the employee with a valid certificate, does not apply until the end of the certification transitional period.
7.2.2 G However, other parts of the FCA Handbook and the Act about
certification employees certification employees apply in the certification transitional period.
7.2.3 G The table in SYSC TP 7.2.4G explains how the requirements of the
FCA Handbook and the Act about certification employees certification employees apply in the certification transitional period.
7.2.4 G Table: How the certification regime applies in the certification
transitional period
Provision in the
Act or the
Handbook
What that provision is about
How it applies in the certification transitional period Glossary definition of certification employee certification employee During the certification transitional period, the Glossary definition of certification employee certification employee covers everyone who would need a certificate to perform their job if the

FCA 202X/YY obligation to issue certificates were in force SYSC 27.2 and the parts of the Act on which it gives guidance … Does not apply except as follows. A firm may issue a certificate during the certification transitional period. The reason it may wish to do this is so that when the requirement in the Act to issue certificates comes into force, the firm will have issued all the certificates that it needs to have issued to allow its certification employees certification employees to carry on their jobs after the certification transitional period. … … SYSC 25 SYSC 25 says that the management responsibilities map should say whether persons described or identified in the management responsibilities map are certification employees certification employees … …
7.3 General material about certification

FCA 202X/YY
7.3.1 G (1) SYSC 27.5.1R (Emergency appointments) allows a firm to appoint
someone (P) to perform a function which would normally be an FCA certification function FCA certification function without P becoming a certification employee certification employee. There is a maximum period for which the appointment can last. (2) When calculating the maximum time period in (1), the firm need not take into account any time spent by P before the general commencement date performing what will become the FCA certification function FCA certification function in (1). (3) When a firm, after the end of the certification transitional period, is calculating the maximum time period in (1), the firm should take into account any time spent by P during the certification transitional period performing the FCA certification function FCA certification function in (1).
7.3.2 G (1) SYSC 27.5.1R only applies where P (as referred to in SYSC TP
7.3.1G) is providing cover for a certification employee certification employee whose absence is reasonably unforeseen. …
7.3.3 G (1) Some FCA certification functions FCA certification functions
only apply where the place of performance of the function has a connection with the United Kingdom (for example, it is carried on there). (2) SYSC 27.5.3R (Temporary UK role (the 30-day rule)) allows a person (P) to carry on a function for a firm that would normally be an FCA certification function FCA certification function because of its connection with the United Kingdom without P becoming a certification employee certification employee. There is a time limit on how long the firm can allow P to do this. …
7.4 Transitional provisions about regulatory references
7.4.1 R (1) If on the general commencement date an employee (P) is already
performing an FCA certification function FCA certification function for an SMCR firm (A), the obligation under SYSC 22 (Regulatory references) for A to obtain a reference when issuing a certificate (including reissuing a certificate) for P for that FCA certification function FCA certification function does not apply

FCA 202X/YY during, at the end of or after the end of the certification transitional period. (2) If there has been a significant change in P’s responsibilities forming part of that FCA certification function FCA certification function as compared to the position on the general commencement date, paragraph (1) ceases to apply from that time.
7.4.2 R SYSC 22.2.1R (Obligation to obtain a regulatory reference) does not
apply to an application for approval as an approved person approved person that:
…
…
TP 8 Bank of England and Financial Services Act 2016: Application to claims management companies TP 8 Note to the reader 8.1.- 1 G SYSC TP 8 has not been amended since 7 December 2020, other than editorial amendments made to reflect the deletion of certain Glossary terms. In SYSC TP 8, unless otherwise specified, the following terms should be read as they had effect in the Handbook Glossary on 7 December 2020:
(1) ‘certification employee’;
(2) ‘certification function’; and
(3) ‘FCA certification function’.
…
8.3 Transitional period for certification for claims management firms
8.3.1 G The effect of the solo-regulated firms’ commencement SI is that the
obligation in section 63E(1) of the Act, for an SMCR firm to take reasonable care to ensure that no employee of the firm performs an FCA certification function FCA certification function unless the firm has

FCA 202X/YY issued the employee with a valid certificate, does not apply during its individual transitional period. …
8.3.3 R During a firm’s individual transitional period the definition of
“certification employee certification employee” is amended to mean an employee (as defined in section 63E of the Act) of the firm who performs a certification function certification function under an arrangement entered into by the firm in relation to the carrying on by the firm of a regulated activity, even though the obligation of the SMCR firm to issue a certificate under section 63F of the Act does not yet apply to the firm. … TP 14 Miscellaneous transitional provisions relating to the Senior Managers and Certification Conduct Rules Regime TP 14.1 Part 1 Note to the reader TP 14.1.-1 G SYSC TP 14.1 has not been amended since 10 July 2026, other than editorial amendments made to reflect the deletion of certain Glossary terms. In SYSC TP 14.1, unless otherwise specified, the following terms should be read as they had effect in the Handbook Glossary on 10 July 2026:
(1) ‘certification employee’; and
(2) ‘FCA certification function’.
Scope
TP
14.1.1
R …
…
Certification
…
TP
14.1.10
G The changes referred to in SYSC TP 14.1.9R also apply to certification employees certification employees already certified as at the second commencement date to perform the significant management, managers of

FCA 202X/YY certification employees or material risk takers FCA certification functions FCA certification functions (as the case may be). TP 14.1.11 R A firm must not notify the FCA under SUP 16.26 (Reporting of information about Directory persons) of a person ceasing to carry on the significant management, managers of certification employees or material risk takers FCA certification functions FCA certification functions (as the case may be) under the amendments referred to in SYSC TP 14.1.9R. TP 14.1.12 G The FCA will itself make the changes to the Directory required to reflect that a person has ceased to carry on an FCA certification function FCA certification function because of the amendments referred to in SYSC TP 14.1.9R. Insert the following new transitional provisions, TP 14.3, after TP 14.2 (Part 2). All the text is new and is not underlined. TP 14.3 Part 3 TP 14.3.1 R SYSC TP 14.3 relates to amendments to SYSC made by the Individual Accountability (SMCR Review Phase 2) Instrument 2027 [Editor’s note:
insert the reference number of this instrument] and certain changes made to the PRA’s rules by the PRA Rulebook: CRR Firms, Non-CRR Firms, Solvency II Firms and Non-Solvency II Firms: Senior Managers Regime (Amendment) [No 2] Instrument [2027]. TP 14.3.2 R In SYSC TP 14.3, the ‘commencement date’ means [date 1]. Regulatory references TP 14.3.3 G The amendment to the form of regulatory references in SYSC 22 Annex 1 (Template for regulatory references given by SMCR firms and disclosure requirements) applies to references requested after the commencement date. TP 14.3.4 G The obligation of a firm to update a regulatory reference given before the commencement date still continues even if the firm would no longer be required to include in a reference the information it is updating if the firm was giving the reference after the commencement date. Enhanced scope SMCR firm: New assets condition TP 14.3.5 R SYSC TP 14.3.5R to SYSC TP 14.3.9G apply to the qualification condition for being an enhanced scope SMCR firm in row (1) of Part 3 of the table in SYSC 23 Annex 1.8.2R (assets of an investment firm), which is referred to in those paragraphs as the ‘new asset qualification condition’.

FCA 202X/YY
TP
14.3.6
R The calculations required for the new asset qualification condition use figures for periods before the commencement date as well as after, so that a firm may meet the new asset qualification condition on the commencement date. TP 14.3.7 G If a firm (which does not meet any other qualification condition) meets the new asset qualification condition on the commencement date, the 1-year countdown to becoming an enhanced scope SMCR firm in SYSC 23 Annex 1.10.1R begins on that day. TP 14.3.8 R The new asset qualification condition is to be treated as an amended version of the significant SYSC firm qualification condition for being an enhanced scope SMCR firm rather than being a completely new qualification condition for being an enhanced scope SMCR firm. TP 14.3.9 G (1) This paragraph sets out the main consequences of SYSC TP 14.3.8R. (2) If a firm:
(a) meets the new asset qualification condition on the commencement date but does not meet any of the other qualification conditions; (b) was an enhanced scope SMCR firm immediately before the commencement date for the reason in (c); and (c) either:
(i) met the significant SYSC firm qualification condition for being an enhanced scope SMCR firm immediately before the commencement date; or (ii) had ceased to meet the significant SYSC firm qualification condition by the commencement date but the 1-year countdown to ceasing to be an enhanced scope SMCR firm under SYSC 23 Annex 1.11.1R was still running, it remains as an enhanced scope SMCR firm and the 1-year period in SYSC 23 Annex 1.10.1R does not apply to the new asset qualification condition. (3) If :
(a) a firm meets the new asset qualification condition on the commencement date;

FCA 202X/YY
(b) the firm was not an enhanced scope SMCR firm on the commencement date; and (c) the 1-year period in SYSC 23 Annex 1.10.1R was running as respects the significant SYSC firm qualification condition immediately before the commencement date, the beginning of the 1-year period in SYSC 23 Annex 1.10.1R as respects the new asset qualification condition is backdated to the time that that period started running as respects the significant SYSC firm qualification condition. (4) If:
(a) a firm does not meet the new asset qualification condition on the commencement date; and (b) the firm was an enhanced scope SMCR firm immediately before the commencement date because it met the significant SYSC firm qualification condition, the 1-year countdown to ceasing to be an enhanced scope SMCR firm under SYSC 23 Annex 1.11.1R begins to run on the commencement date. (5) If:
(a) a firm does not meet the new asset qualification condition on the commencement date; and (b) the 1-year countdown to ceasing to be an enhanced scope SMCR firm under SYSC 23 Annex 1.11.1R was running immediately before the commencement date because it had ceased to meet the significant SYSC firm qualification condition, that 1-year countdown continues to run after the commencement date. Enhanced scope SMCR firm: Inflation adjustment TP 14.3.10 R (1) This provision deals with the changes to the financial figures in the
table in SYSC 23 Annex 1.8.2R (Table: Financial qualification
conditions) made by the instrument referred to in SYSC TP 14.3.1R. (2) The rules in SYSC 23 Annex 1 8.27R to SYSC 23 Annex 1 8.29G (Automatic adjustment of financial thresholds: Effect on past and future calculations) about the effect of a change in the financial

FCA 202X/YY figures in the table in SYSC 23 Annex 1 8.2R on current and past averaging periods also apply to the changes in (1) as if the commencement date was the end of a 5-year period as referred to in SYSC 23 Annex 1 8.23R(1) on which an increase to the thresholds had taken place. TP 14.3.11 G The first automatic update of all the financial thresholds to which the automatic inflation adjustment applies will occur in 2031. This means that the first updating period for the new asset qualification condition as defined in SYSC TP 14.3.5R will last for about 4 years not the usual 5. Statements of responsibilities TP 14.3.12 R A core SMCR firm need not update a statement of responsibilities if the only change is to incorporate the abolition of FCA-prescribed senior management responsibilities by the FCA instrument referred to in SYSC TP 14.3.1R. TP 14.3.13 G However, a firm should record, for example, a reallocation of the remaining FCA-prescribed senior management responsibilities among its SMF managers connected to the changes referred to in SYSC TP 14.3.12R. TP 14.3.14 G A firm should update a statement of responsibilities to reflect the changes referred to in TP 14.3.12R as soon as there are other changes it should make. TP 14.3.15 G A statement of responsibilities prepared under the previous requirements for statements of responsibilities is likely to meet the requirements of SYSC 24A (Senior managers and conduct rules regime: Statements of responsibilities). This is as long as it is updated to include changes that did not have to be included because, under those previous requirements, a statement of responsibilities only had to be updated to include a significant change (individual or cumulative). TP 14.3.16 G The previous requirements for a statement of responsibilities were SUP
10.11 (Statements of responsibilities) (which was revoked by the FCA
instrument referred to in SYSC TP 14.3.1R) and sections 60(2A) and 62A of the Act (which have been repealed). TP 14.3.17 R The record keeping requirements in SYSC 24A.7 (Past versions) apply to statements of responsibilities created under the previous requirements (as referred to in SYSC TP 14.3.16G). However, a firm is not in breach of the requirements in SYSC 24A because it disposed of a past version of a statement of responsibilities before the commencement date if it was not required to retain a copy of it under the regulatory system at the time it disposed of it.

FCA 202X/YY
Amend the following as shown.
Sch 1 Record keeping requirements
…
Sch 1.2 G
Handbook reference
Subject of record
Contents of record
When record must be made
Retention period
…
SYSC 22.9.1R … … … …
SYSC 24A.7.1R Past versions of a statement of responsibilities Past versions of a statement of responsibilities None specified but effectively from creation of a new version 6 or 10 years from the date superseded SYSC 24A.7.3G Past versions of a statement of responsibilities Past versions of a statement of responsibilities SYSC 24A.7.3G does not itself impose requirements but says that past versions of a firm’s statement of responsibilities are an important
part of its
records
SYSC 24A.7.3G does not itself impose requirements but says that past versions of a firm’s statement of responsibilities are an important
part of its
records
…
SYSC 25.8.3R Past versions of a firm’s management responsibilities maps … None specified but effectively from creation of a new version 6 or 10 years from the date superseded, or 6 years for large non-directive insurers …

FCA 202X/YY
Annex C
Amendments to the Code of Conduct sourcebook (COCON) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. COCON 1 (Application and purpose) is deleted in its entirety. The deleted text is not shown but the chapter is marked ‘[deleted]’ as shown below. 1 Application and purpose [deleted] Insert the following new chapters, COCON 1A and COCON 1B, after COCON 1 ([deleted]). [Editor’s note: For the purposes of this consultation, COCON 1A and COCON 1B are shown marked up against the version of COCON 1 that existed before it was deleted. Deletions are shown with strikethrough and additions with underlining. The order of some provisions has changed; that reordering is not shown with strikethrough and underlining.] 1 1A Application and purpose 1.1 1A.1 Application Introduction 1.1.1 1A.1.1 G Under section 64A of the Act, the FCA may make rules about the conduct of certain persons working in firms. COCON contains those rules. 1.1.1-A 1A.1.2 G COCON 1 Annex 2 COCON 1A Annex 2 (What COCON covers How the application rules in COCON 1A (Application and purpose) work) contains flow diagrams explaining how COCON 1.1 COCON 1A works. 1A.1.3 G This chapter is divided as follows:
(1) COCON 1A.2 to COCON 1A.4 describe the persons to whom COCON applies (Who?); (2) COCON 1A.5 to COCON 1A.8 describe the conduct to which COCON applies (What?); (3) COCON 1A.9 to COCON 1A.10 describe the territorial scope of COCON (Where?); and (4) COCON 1A.11 deals with miscellaneous matters about the scope of COCON and COCON 1A.12 describes the purpose of COCON.

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1A.2 To whom does it apply? (Main rules) To whom does it apply? Main rules 1.1.1A 1A.2.1 R COCON (except COCON 2.3 (Firms: awareness of staff and breaches)) applies to the persons set out in the table in COCON 1.1.2R COCON 1A.2.2R. 1.1.2 1A.2.2 R Table: To whom does COCON apply? Persons to whom COCON applies Comments and whether a person of this type is a senior conduct rules staff member
Part A (SMCR firms)
(1) An SMF manager. A person of this type is a senior conduct rules staff member. (2) An employee (“P”) of an SMCR firm who:
(a) performs the function of an SMF manager; (b) is not an approved person to perform is not subject to a current SMF approval or notification for the function in question; and (c) is required to be an approved person subject to a current SMF approval or notification for that function at the time P performs that function. A person of this type is a senior conduct rules staff member. (3) An employee of an SMCR firm who would be performing an FCA-designated senior management function but for SUP 10C.3A.6R (The 12-week 18-week rule). A person of this type is a senior conduct rules staff member. (4) A certification employee of an SMCR firm. This applies even if the certification employee has not been notified that COCON applies to them or notified of the rules that apply to them.

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(5) An employee of an SMCR firm who would be performing an FCA certification function but for SYSC 27.5.1R (Emergency appointments) or SYSC 27.5.3R (Temporary UK role). (6) (4) Any employee of an SMCR firm not coming within another row of Part A of this
table, except one listed in column (2) of this
row (6) (4) of this table.
(A) This row (6) (4) does not apply to an employee of an SMCR firm who only performs functions falling within the scope of the following roles:
(a) receptionists;
(b) switchboard operators;
(c) post room staff;
(d) reprographics/print room staff;
(e) property/facilities management;
(f) events management;
(g) security guards;
(h) invoice processing;
(i) audio visual technicians;
(j) vending machine staff;
(k) medical staff;
(l) archive records management;
(m) drivers;
(n) corporate social responsibility staff; (o) taking part in following activities of the firm:
(i) the firm’s activities as a data controller; or (ii) the firm’s activities of data processing; as defined in the data protection legislation, but subject to Note (1) of this table;

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(p) cleaners;
(q) catering staff;
(r) personal assistant or secretary;
(s) information technology support (ie, helpdesk); and (t) human resources administrators /processors. (C) This row (6) also does not apply to an employee of an SMCR firm that is an FCAauthorised person until 31 March 2021. (7) [deleted] (8) (5) A board director of a UK SMCR firm. A person of this type is a senior conduct rules staff member. (9) (6) An employee of an SMCR firm who would be performing a PRA-designated senior management function but for the rules of the PRA Rulebook that are listed in paragraph (2) of the ‘Comments’ column of this row. (1) A person of this type is a senior conduct rules staff member. (2) The PRA rules referred to in the ‘Persons to whom COCON applies’ column of this row (9) are:
(a) Rule Rules 2.3 to 2.3B of the Senior Management Functions Part (General); (b) Rule Rules 2.4 to 2.4B of the Insurance – Senior Management Functions Part (General); (c) Rule Rules 2.4 to 2.4B of the Large Non-Solvency II Firms – Senior Management Functions Part (General); and (d) Rule Rules 2.3 to 2.3B of the Non-Solvency II Firms – Senior Management Functions
Part (General).

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(7) A sole trader who is an SMCR firm. A person of this type is a senior conduct rules staff member.
Part B (Appointed representatives)
[Editor’s note: Placeholder for possible changes relating to appointed representatives] Note (1): A function is only within paragraph (o) of column (2) (Comments) of row (6) (4) of Part A of this table if the function does not require the employee concerned to exercise a significant amount of discretion or judgment. Notification requirements 1.1.5 1A.2.3 G (1) The guidance in COCON 2.3 applies to SMCR firms. (2) [deleted] (3) SYSC 27.6.3R provides that a function performed by a nonexecutive director of a firm acting as such is not an FCA certification function for that firm. 1A.3 To whom does it apply? (Supplemental rules) Swiss general insurers 1.1.2A 1A.3.1 R For Swiss general insurers, references in this sourcebook to parts of the PRA Rulebook for ‘Solvency II firms’ are to be read as references to the corresponding parts of the PRA Rulebook applying to large non-directive insurers. Consumer duty 1.1.5A 1A.3.2 R The conduct of a member of the conduct rules staff of a firm is not within the scope of Rule 6 in COCON 2.1 (You must act to deliver good outcomes for retail customers):
(1) unless the corresponding COCON firm activities of the firm are within the scope of PRIN 3.1 (Who?) so far as it applies to the Consumer Duty; and (2) except to the extent that the Consumer Duty applies to that firm under PRIN 3.1.

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1A.4 To whom does it apply? (Which conduct rules apply to which staff?) 1.1.3 1A.4.1 R Rules 1 to 6 in COCON 2.1 apply to all conduct rules staff. 1.1.4 1A.4.2 R (1) Rules SC1 to SC4 in COCON 2.2 apply to all senior conduct rules staff members (subject to (2)). (2) SC1 to SC3 in COCON 2.2 do not apply to a senior conduct rules staff member within paragraph (d) of the definition of senior conduct rules staff member row (5) of Part A of the table in COCON 1A.2.2R (a board director of a UK SMCR firm) (P) unless:
(a) P also falls into one of the other paragraphs rows of Part A of that definition table; or (b) P would fall within row (2), (3) or (9) of Part A of the that
table in COCON 1.1.2R (Table: To whom does COCON
apply?) if P were an employee.
1A.5 To what conduct does it apply? Basic provisions Summary of the rules about the kind of conduct to which COCON applies 1A.5.1 G This section sets out the basic description of the kinds of conduct to which COCON applies. 1A.5.2 G COCON 1A.6 to COCON 1A.8 then set out further material about the type of conduct to which COCON applies as follows:
(1) COCON 1A.6.1R narrows the scope of COCON as set out in this
section in the case of staff of all firms except staff of an SMCR
banking firm or of certain pure benchmark SMCR firms.
(2) COCON 1A.6.2R narrows the scope of COCON as set out in this
section in the case of staff of certain pure benchmark SMCR firms.
(3) COCON 1A.7 substantially reduces the exclusion in (1) and (2) in the case of harassment. The rules described in this section continue to apply to such conduct. (4) COCON 1A.8 has special provisions relating to the consumer duty in Rule 6 in COCON 2.1 and other material about the kind of conduct to which COCON applies. To what conduct does it apply? (Basic rules: Limitations in the Act: Firms)

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1.1.6
1A.5.3
R For a person (P) who is an approved person approved or notified person, COCON applies to the conduct of P in relation to the performance by P of functions relating to the carrying on of activities (whether or not regulated activities) by the firm (Firm A) on whose application approval was given, or by whom the SMF notification was made, with respect to P. [Note: sections 64A(4) and (5)(a) of the Act (Rules of conduct)] 1.1.6A 1A.5.4 R For a person (P) who is a board director of a firm (Firm A) but is not an approved person approved or notified person of Firm A, COCON applies to the conduct of P in relation to the performance by P of functions relating to the carrying on of activities (whether or not regulated activities) by Firm A. [Note: sections 64A(4) and (5)(ab) of the Act (Rules of conduct)] 1.1.7 1A.5.5 R For a person (P) who:
(1) comes within Part A of the table in COCON 1A.2.2R (Table: To whom does COCON apply?); and (2) does not come within COCON 1A.5.3R, COCON 1A.5.4R or COCON 1A.5.6R, (1) For a person (P) subject to COCON who is not an approved person, COCON applies to the conduct of P in relation to the performance by P of functions relating to the carrying on of activities (whether or not regulated activities) by P’s employer (Firm A). (2) This rule does not apply where COCON 1.1.6A applies. [Note: sections 64A(4) and (5)(b) of the Act (Rules of conduct)] 1A.5.6 R For a sole trader (P), COCON applies to the conduct of P in relation to the performance by P of functions relating to the carrying on of activities (whether or not regulated activities) by P. [Note: sections 64A(4) and (5)(ab) of the Act (Rules of conduct)] To what conduct does it apply? (Basic rules: Limitations in the Act: Appointed representatives) 1A.5.7 [Editor’s note: Placeholder for possible changes relating to appointed representatives]

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1A.5.8 [Editor’s note: Placeholder for possible changes relating to appointed representatives] Definition of COCON firm activities 1.1.7-A 1A.5.9 R (1) The term “COCON firm activities” means (in relation to conduct of P in relation to Firm A) the corresponding activities of Firm A as referred to in COCON 1.1.6R COCON 1.5.3R to COCON 1.1.7R COCON 1A.5.5R (To what conduct does it apply?). (2) A person is a member of the conduct rules staff of Firm A if they meet the description of P in relation to that firm in COCON 1.1.6R COCON 1A.5.3R to COCON 1.1.7R COCON 1A.5.5R and come within Part A of the table in COCON 1A.2.2R (Table: To whom does COCON apply?). (3) The terms “P” and “Firm A” have the same meaning as they do in COCON 1.1.6R COCON 1A.5.3R to COCON 1.1.7R COCON 1A.5.5R. 1A.5.10 R (1) This rule applies to a sole trader (P). (2) The term “COCON firm activities” in relation to P means the activities of P as referred to in COCON 1A.5.6R. (3) A sole trader is treated as being a member of the conduct rules staff of their own firm. 1A.5.11 [Editor’s note: Placeholder for possible changes relating to appointed representatives] 1A.5.12 [Editor’s note: Placeholder for possible changes relating to appointed representatives] To what conduct does it apply? (Relationship between the exclusions) 1.1.5B R (1) The restrictions of the scope of COCON in COCON 1.1.7AR to COCON 1.1.7FR (when they apply) are in addition to those in COCON 1.1.6R to COCON 1.1.7R. (2) The restrictions of the scope of COCON in COCON 1.1.7AR to COCON 1.1.7FR (when they apply) are cumulative. 1.1.5C G The effect of COCON 1.1.5BR is shown in section 3 of COCON 1 Annex 2 (What conduct COCON applies to). 1A.6 To what conduct does it apply? (Other limitations: Non-banks)

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To what conduct does it apply? (Other limitations: Non-banks) General limitation for non-banks 1.1.7A 1A.6.1 R (1) Where This rule applies where Firm A as described in COCON 1.1.6R to COCON 1.1.7R (5) is an SMCR firm other than an SMCR banking firm, the application of COCON is further restricted by this rule, subject to COCON 1.1.7FR. (2) COCON only applies to conduct that forms part of, or is for the purpose of, any of the following:
(a) the SMCR financial activities of Firm A; or (b) any activities of Firm A that have, or might reasonably be regarded as likely to have, a negative effect on:
(i) the integrity of the UK financial system; or (ii) the ability of Firm A to meet the “fit and proper” test in threshold condition 2E and 3D (Suitability); or (iii) the ability of Firm A to meet the applicable requirements and standards under the regulatory system relating to Firm A’s financial resources. (3) This rule does not apply where COCON 1.1.7BR COCON 1A.6.2R applies. (4) This rule does not apply to Rule 6 in COCON 2.1 (You must act to deliver good outcomes for retail customers). (5) ‘Firm A’ refers to Firm A in COCON 1A.5.3R to COCON 1A.5.5R and P in COCON 1A.5.6R. To what conduct does it apply? (Other limitations: Benchmark Limitation for benchmark firms) 1.1.7B 1A.6.2 R (1) Where a member (M) of the conduct rules staff of Firm A as described in COCON 1.1.6R to COCON 1.1.7R (4) meets the condition in (c) and Firm A meets the conditions in (a) and (b), the application of COCON to the conduct of M in relation to Firm A is further restricted by this rule (subject to COCON 1.1.7FR):
(a) the firm is a pure benchmark SMCR firm; (b) the firm is an Annex II benchmark administrator (whether or not it also administers other benchmarks); and

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(c) M does not perform any functions described in COCON 1.1.6R COCON 1A.5.3R to COCON 1.1.7R COCON 1A.5.6R in relation to Firm A with respect to any benchmark that the firm administers except a benchmark that is subject to Annex II to the benchmarks regulation. (2) (a) The only conduct to which the following rules apply is the conduct described in (2)(b):
(i) the rules in COCON 2.1 (Individual conduct rules); and (ii) rule SC4 in COCON 2.2 (You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice). (b) The rules in (2)(a) apply only to any of the following:
(i) the performance of a function by M in relation to the carrying on of a regulated activity by Firm A; (ii) (if M is an SMF manager) the performance by M of a controlled function in relation to Firm A (whether or not approval has been sought and granted or notification made). (3) Rules SC1 to SC3 in COCON 2.2 (Senior manager conduct rules) apply only to conduct:
(a) that comes within (2)(b); or
(b) that comes within COCON 1.1.7AR COCON 1A.6.1R, but this paragraph (3)(b) only applies in a prudential context. (4) ‘Firm A’ refers to Firm A in COCON 1A.5.3R to COCON 1A.5.5R and P in COCON 1A.5.6R. 1A.7 To what conduct does it apply? (Other limitations: Non-banks: Harassment) To what conduct does it apply? (Other limitations: Non-banks: Harassment) 1.1.7F 1A.7.1 R (1) This rule applies in relation to an SMCR firm other than an SMCR banking firm.

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(2) Its purpose is to extend the scope of COCON beyond the scope set out in COCON 1.1.7AR and COCON 1.1.7BR COCON 1A.6 (To what conduct does it apply? (Other limitations: Non-banks)). (3) COCON applies to the conduct of a member of the conduct rules staff of a firm (Firm A) of a kind described in (4) in relation to any of the following individuals:
(a) an employee of Firm A or of a member of its group; (b) an individual who performs a function of Firm A or of a member of its group; (c) an individual who provides services to Firm A or to a member of its group; (d) an employee of a person who provides services to Firm A or to a member of Firm A’s group; (e) an individual who performs a function of a person who provides services to Firm A or to a member of Firm A’s group; or (f) an individual when performing an activity that forms part of an activity of Firm A. (4) The kind of conduct to which this rule applies as referred to in (3) is unwanted conduct of the following kinds in relation to an individual referred to in (3) (‘B’):
(a) conduct that has the purpose or effect of:
(i) violating B’s dignity; or
(ii) creating an intimidating, hostile, degrading, humiliating or offensive environment for B; or (b) conduct that is violent to B. (5) If Firm A carries on businesses some of which involve SMCR financial activities and the others of which do not, conduct is not within the scope of this rule if it only relates to a business of Firm A that does not involve SMCR financial activities. 1.1.7G 1A.7.2 G COCON 4.3 (Specific guidance on harassment) gives guidance on the kind of conduct covered by COCON 1.1.7FR COCON 1A.7.1R, including the

FCA 202X/YY point that COCON 1.1.7FR COCON 1A.7.1R only covers conduct that is serious. 1A.7.3 G Conduct of the kind described in this section is only within the scope of COCON if it is also within the scope of COCON 1A.5 (To what conduct does it apply? Basic provisions). 1A.8 To what conduct does it apply? (Supplemental rules) To what conduct does it apply? (Other limitations: Rule 6 in COCON 2.1) 1.1.7C 1A.8.1 R The conduct of a member of the conduct rules staff of a firm is not within the scope of Rule 6 in COCON 2.1 (You must act to deliver good outcomes for retail customers) unless the corresponding COCON firm activities of the firm are within the scope of PRIN 3.2 (What?) so far as it applies to Principle 12. 1.1.7D 1A.8.2 G The effect of COCON 1.1.7C COCON 1A.8.1R is that a person’s conduct is not within the scope of Rule 6 in COCON 2.1 if the related activities of the firm fall outside the scope of Principle 12. If Principle 12 applies, Rule 6 in COCON 2.1 only applies if the conduct is also within the scope of the other relevant COCON application rules (although one of the COCON application rules (COCON 1.1.7AR COCON 1A.6.1R) does not apply to Rule 6). 1.1.7E 1A.8.3 R To the extent that Rule 6 in COCON 2.1 (You must act to deliver good outcomes for retail customers) applies to the conduct of a person, Rule 4 in COCON 2.1 (You must pay due regard to the interests of customers and treat them fairly) does not apply to that conduct of that person. [To what conduct does it apply? (Appointed representatives)] [1.1.8A] [R] [Editor’s note: As explained in the note at the start of this draft instrument, this rule is not included in this consultation.] To what conduct does it apply? (Performing several roles) 1.1.8 1A.8.4 G (1) More than one of COCON 1.1.6R COCON 1A.5 to COCON 1.1.7ER COCON 1A.8 may apply to the same individual performing several roles. (2) For example, say that an individual (A) is an approved person approved or notified person for firm X and is employed by firm Y in a role that does not involve a controlled function or being a director.

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(3) COCON 1.1.6R COCON 1A.5.3R applies to A’s role with firm X and COCON 1.1.7R COCON 1A.5.5R applies to A’s role with firm Y. 1A.9 Where does it apply? (Basic rules) Where does it apply? 1.1.8B R The restrictions of the scope of COCON in COCON 1.1.9R to COCON 1.1.10R on the one hand and COCON 1.1.11C on the other are cumulative. 1.1.8C G The effect of COCON 1.1.8BR is shown in section 4 of COCON 1 Annex 2 (Territorial scope). Territorial scope: Basic rules 1.1.9 1A.9.1 R (1) COCON applies to the conduct of conduct rules staff set out in (2) a senior conduct rules staff member wherever it is performed. (2) This rule applies to:
(a) a senior conduct rules staff member; and (b) a certification employee performing FCA certification function (6) (material risk takers) in the table in SYSC 27.7.3R for a UK SMCR firm. 1.1.9A G (1) This paragraph deals with how COCON 1.1.9R applies to a certification employee (P) who performs the material risk taker FCA certification function and another FCA certification function for the same UK SMCR firm. (2) If P’s conduct relates to both FCA certification functions (because for example those two functions cover the same activities) COCON applies without territorial limitation to P’s conduct. (3) If part of P’s conduct relates to the material risk taker FCA certification function and the rest of P’s conduct relates to the other FCA certification function, COCON only applies without territorial limitation to P’s conduct in relation to the material risk taker FCA certification function. 1.1.10 1A.9.2 R (1) This rule applies to members of a firm’s conduct rules staff apart from conduct rules staff in COCON 1.1.9R COCON 1A.9.1R. (2) Subject to (3), COCON only applies to the conduct of persons to whom this rule applies (as set out in (1)) if that conduct:

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(a) is performed from an establishment maintained in the United Kingdom by the SMCR firm; or (b) involves dealing with a client of the firm in the United Kingdom from an establishment overseas. (3) Paragraph (2)(b) only applies in relation to a UK SMCR firm. 1.1.11 1A.9.3 G The FCA interprets the phrase ‘dealing with’ in COCON 1.1.10R COCON 1A.9.2R as including having contact with customers and extending beyond ‘dealing’ as used in the phrase ‘dealing in investments’. ‘Dealing in’ is used in Schedule 2 to the Act to describe, in general terms, the regulated activities which are specified in Part II of the Regulated Activities Order. 1.1.11A 1A.9.4 G The FCA interprets the phrase ‘a client of the firm in the United Kingdom’ in COCON 1.1.10R COCON 1A.9.2R as referring to:
(1) for a client which is a body corporate, its office or branch in the United Kingdom; or (2) for a client who is an individual, a client who is in the United Kingdom at the time of the dealing. 1A.10 Where does it apply? (Supplemental rules) Consumer duty 1.1.11C 1A.10.1 R The conduct of a member of the conduct rules staff of a firm is not within the scope of Rule 6 in COCON 2.1 (You must act to deliver good outcomes for retail customers) unless the corresponding COCON firm activities of the firm are within the scope of PRIN 3.3 (Where?) so far as it applies to Principle 12. 1.1.11D 1A.10.2 G The effect of COCON 1.1.8BR and COCON 1.1.11CR is that conduct Conduct of a member of a firm’s conduct rules staff is only within the territorial scope of Rule 6 in COCON 2.1 if it is within the scope of COCON 1.1.9R to COCON 1.1.10R COCON 1A.9 (Where does it apply? (Basic rules)) and the corresponding activity of their firm is within the territorial scope of the Consumer Duty as set out in PRIN 3.3. Effect of the RAO 1.1.11B 1A.10.3 G (1) The Regulated Activities Order has an effect on the territorial scope of COCON. (2) This is because whether or not conduct involves regulated activities may affect how and whether COCON applies. Therefore, where

FCA 202X/YY overseas activities are excluded from being regulated activities by the Regulated Activities Order, that will have an effect on COCON. (3) An example of (1) is the territorial restriction relating to regulated claims management activities. (4) As explained in PERG 2.4A (Link between regulated claims management activities and Great Britain), a claims management activity specified in the Regulated Activities Order is only a regulated activity if it is carried on by way of business in Great Britain. (5) The result is that a claims management activity specified in the Regulated Activities Order carried on outside Great Britain is an unregulated activity for the purposes of COCON. (6) This restriction:
(a) applies to conduct rules staff coming within COCON 1.1.9R COCON 1A.9.1R (Territorial scope: Basic rules) as well as to other conduct rules staff; and (b) applies in addition to the restriction in COCON 1.1.10R COCON 1A.9.2R. 1A.11 Other provisions about scope and related matters EU law 1.1.12 1A.11.1 R A person will not be subject to COCON to the extent that this would be contrary to the requirements of an EU measure passed or made before IP completion day, to the extent that those requirements continue to have effect after IP completion day under the EUWA. Non-executive directors 1.1.14 1A.11.2 G COCON 1 Annex 1 COCON 1A Annex 1 has guidance on the role and responsibilities of non-executive directors to whom COCON applies. 1A.12 Purpose Purpose 1.1.13 1.12.1 G The purpose of this chapter sourcebook is to set out rules for conduct rules staff and to provide guidance about those rules to firms whose staff are subject to them.

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1A.12.2 G The purpose of this sourcebook is also to set out requirements for firms to make staff aware of the rules in COCON that apply to them. [Editor’s notes:
(1) COCON 1 Annex 1 (Guidance on the role and responsibilities of non-executive directors of SMCR firms) will become COCON 1A Annex 1 but will otherwise not be changed and so the text is not set out in this consultation. (2) For the purposes of this consultation, COCON 1A Annex 2 is shown marked up against the version of COCON 1 Annex 2 that existed before it was deleted. Deletions are shown with strikethrough and additions with underlining. The flow diagrams in COCON 1A
Annex 2 are unchanged from those in the current COCON 1 Annex 1, except as
described in Editor’s notes below.]
1 Annex 2
1A Annex
2
How the application rules in COCON 1.1 COCON 1A (Application and purpose) work
Section 1: Purpose of this Annex and introduction
1 Annex 2
1.1
1A Annex
2 1.1
G The purpose of this Annex is to describe how COCON 1.1 COCON 1A (Application) works in the form of flow diagrams. 1 Annex 2 1.2 1A Annex 2 1.2 G COCON does not apply unless all the following conditions are met:
(1) the person whose conduct is in question is of a kind to whom COCON applies (section 2 of COCON 1 Annex 2 this Annex deals with this); (2) the conduct is of a kind to which COCON applies (section 3 of COCON 1 Annex 2 this Annex deals with this); and (3) the conduct is within the territorial scope of COCON (section 4 of COCON 1 Annex 2 this Annex deals with this). 1 Annex 2 1.3 1A Annex 2 1.3 G In this Annex:

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(1) ‘P’ means the person whose conduct is in question; (2) ‘F’ means the firm P works for; (3) the ‘consumer duty rule’ means Rule 6 in COCON 2.1; and (4) the ‘harassment rule’ means COCON 1.1.7FR COCON 1A.7.1R. 1 Annex 2 1.4 1A Annex 2 1.4 G If a flow diagram in one section of this Annex says that COCON does not apply, there is no need to look any further in that flow diagram or in any later flow diagram or section of this Annex. 1 Annex 2 1.5 1A Annex 2 1.5 G This Annex deals with the 3 sets of rules in COCON 1.1 COCON 1A (Who?, What? and Where?) in the same order as COCON 1.1 COCON 1A. However, a person wanting to see whether conduct is within the scope of COCON can apply them in any order. For example, if conduct takes place outside the UK, a person may wish to apply the territorial scope rules first. If the answer is that the conduct is outside the territorial scope of COCON, COCON does not apply and there is no need to look at any other part of COCON 1.1 COCON 1A. 1 Annex 2 1.6 1A Annex 2 1.6 G COCON 4 Annex 1 contains more detailed flow diagrams dealing with conduct within the harassment rule.
Section 2: Who does COCON apply to?
1 Annex 2
2.1
1A Annex
2 2.1
G This section deals with the types of people COCON applies to. It is guidance on COCON 1.1.1AR COCON 1A.2 to COCON 1.1.5AR COCON 1A.4. 1 Annex 2 2.2 1A Annex 2 2.2 G Flow diagram: Who COCON applies to [Editor’s note: The flow diagram to be included in COCON 1A Annex 2 2.2G will be the same as the current version in COCON 1 Annex 2 (which is included here for convenience of the reader) but with the following amendments to the text in the boxes:

References to the table in COCON 1.1.2R are to the table in COCON 1A.2.2R.

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References to row 6 of the table in COCON 1.1.2R are to row 4 of Part A of the table in
COCON 1A.2.2R.
References to COCON 1 Annex 2 2.3G are to COCON 1A Annex 2 2.3G.
References to COCON 1.1.5AR are to COCON 1A.3.2R.]
1 Annex 2
2.3
1A Annex
2 2.3
G The flow diagram in COCON 1 Annex 2 2.2G COCON 1A Annex 2 2.2G does not cover COCON 1.1.4R(2) COCON 1A.4.2R. 1 Annex 2 2.4 1A Annex 2 2.4 G COCON 1.1.4R(2) COCON 1A.4.2R says that the only senior manager conduct rule in COCON 2.2 that applies to a director of a UK SMCR firm who is not an SMF manager and does not perform the functions of one is rule SC4. In particular, that means that the only senior manager conduct rule that applies to many non-executive directors is SC4.
Section 3: What conduct COCON applies to: Introduction

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1 Annex 2
3.1
1A Annex
2 3.1
G This section deals with the types of conduct COCON applies to. It is guidance on COCON 1.1.5BR COCON 1A.5 to COCON 1.1.8AR COCON 1A.8. In particular, it explains COCON 1.1.5BR. 1 Annex 2 3.2 1A Annex 2 3.2 G COCON 1 Annex 2 3.4G COCON 1A Annex 2 3.4G contains the first part of the flow diagram. If this part of the flow diagram says that COCON does not apply, that means that the conduct in question is not within the scope of COCON. There is no need to go further in the flow diagram. 1 Annex 2 3.3 1A Annex 2 3.3 G After that, the flow diagram splits into 3 parts, depending on what kind of firm F is. What conduct COCON applies to: Questions applicable to all firms 1 Annex 2 3.4 1A Annex 2 3.4 G Flow diagram: What conduct COCON applies to: Questions applicable to all firms [Editor’s note: The flow diagram to be included in COCON 1A Annex 2 3.4G will be the same as the current version in COCON 1 Annex 2 (which is included here for convenience of the reader) but with the following amendments to the text in the boxes:

References to COCON 1 Annex 2 3.6G are to COCON 1A Annex 2 3.6G.
References to COCON 1 Annex 2 3.7G are to COCON 1A Annex 2 3.7G.
References to COCON 1 Annex 2 3.8G are to COCON 1A Annex 2 3.8G.
References to COCON 1.1.6R to COCON 1.1.7R are to COCON 1A.5.]

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1 Annex 2
3.5
1A Annex
2 3.5
COCON 1.3.2G COCON 1B.3.2G to COCON 1.3.9G COCON 1B.3.9G contain guidance on COCON 1.1.6R to COCON 1.1.7R COCON 1A.5 as referred to in the flow diagram in COCON 1 Annex 2 3.4G COCON 1A Annex 2 3.4G. What COCON applies to: SMCR banking firms 1 Annex 2 3.6 G Flow diagram: SMCR banking firms

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1A Annex
2 3.6
[Editor’s notes:
(1) The flow diagram to be included in COCON 1A Annex 2 3.6G will be the same as the current version in COCON 1 Annex 2 (which is included here for convenience of the reader) but with the following amendments to the text in the boxes:

References to COCON 1 Annex 2 are to COCON 1A Annex 2.
References to COCON 1.1.7C are to COCON 1A.8.1R.
(2) As explained in the note at the start of this draft instrument, COCON 1.1.8AR is not included in this consultation and so it has been left unamended in the flow diagram.] What COCON applies to: Firms other than SMCR banking firms and benchmark administrators 1 Annex 2 3.7 G Flow diagram: Firms other than SMCR banking firms or benchmark administrators

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1A Annex
2 3.7
[Editor’s notes:
(1) The flow diagram to be included in COCON 1A Annex 2 3.7G will be the same as the current version in COCON 1 Annex 2 (which is included here for convenience of the reader) but with the following amendments to the text in the boxes:

References to COCON 1 Annex 2 are to COCON 1A Annex 2.
References to COCON 1.1.7C are to COCON 1A.8.1R.
References to COCON 1.1.7AR are to COCON 1A.6.1R.
(2) As explained in the note at the start of this draft instrument, COCON 1.1.8AR is not included in this consultation and so it has been left unamended in the flow diagram.]

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What COCON applies to: Benchmark administrators 1 Annex 2 3.8 1A Annex 2 3.8 G Flow diagram: Benchmark administrators [Editor’s note: The flow diagram to be included in COCON 1A Annex 2 3.8G will be the same as the current version in COCON 1 Annex 2 (which is included here for convenience of the reader) but with the following amendments to the text in the boxes:

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References to COCON 1 Annex 2 are to COCON 1A Annex 2.
References to COCON 1.1.7BR are to COCON 1A.6.2R.]
Section 4: Territorial scope
1 Annex 2
4.1
1A Annex
2 4.1
G This section deals with the territorial scope of COCON. It is guidance on COCON 1.1.8BR COCON 1A.9 to COCON 1.1.11DR COCON 1A.10. 1 Annex 2 4.2 1A Annex 2 4.2 G Flow diagram: Territorial scope [Editor’s note: The flow diagram to be included in COCON 1A Annex 2 4.2G will be the same as the current version in COCON 1 Annex 2 (which is included here for convenience of the reader) but with the following amendments to the text in the boxes:
References to COCON 1.1.11CR are to COCON 1A.10.1R.
References to COCON 1.1.10R(2)(a) and (b) are to COCON 1A.9.2R(2)(a) and (b).
The reference to the material risk takers certification function will be removed in the final
version.]

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Section 5: Topics not covered
1 Annex
2 5.1
1A
Annex 2
5.1
G This Annex does not cover the effect described in COCON 1.1.11BG COCON 1A.10.3G (effect on the territorial scope of COCON of the Regulated Activities Order) or COCON 1.1.12R COCON 1A.11.1R (requirements of an EU measure passed or made before IP completion day). 1B Further material about the scope of COCON

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1B.1 What this chapter covers
1B.1.1 G The purpose of this chapter is to set out further material explaining the scope of COCON. 1B.1.2 G COCON 1B.2 explains the use of the term ‘investment’ in COCON. 1B.1.3 G COCON 1B.3 has detailed guidance about the application of COCON to:
(1) private life; and
(2) the staff of SMCR firms that are not banks.
1B.1.4 G COCON 1B.3 has in particular an explanation of how the topics in COCON 1B.1.3G apply to harassment. 1.2 1B.2 Investments 1.2.1 1B.2.1 G COCON refers in a number of places to ‘investments’. The Glossary meaning of investment is wide and is not just limited to the ordinary dictionary meaning. 1.2.2 1B.2.2 G Therefore, for example, an approved person approved or notified person performing controlled functions in a Solvency II firm or a small non-directive insurer should note that that term includes rights under a contract of insurance, meaning they should also take into account those parts of COCON which provide guidance on individual conduct rules that refer to ‘investments’. 1.2.3 1B.2.3 G Where guidance refers to risks associated with investments, that will include risks applicable to rights under a contract of insurance including for example the risk of inadequate cover. 1.3 1B.3 Scope of COCON Introduction 1.3.1 1B.3.1 G This section deals with the restrictions on the scope of COCON based on:
(1) the restrictions on the scope of COCON based on the activities of the firm in COCON 1.1.6R to COCON 1.1.7R (To what conduct does it apply? (Limitations in the Act)) COCON 1A.5 (To what conduct does it apply? Basic provisions) (COCON 1.3.2G COCON 1B.3.2G to COCON 1.3.9G COCON 1B.3.9G deal with this);

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(2) the restrictions on the scope of COCON based on the SMCR financial activities of a firm in COCON 1.1.7AR (To what conduct does it apply? (Other limitations: Non-banks)) COCON 1A.6.1R (General limitation for non-banks) (COCON 1.3.10G COCON 1B.3.10G to COCON 1.3.16G COCON 1B.3.16G deal with this); and (3) COCON 1.1.7BR (To what conduct does it apply? (Other limitations:
Benchmark firms)) the restrictions on the scope of COCON based on COCON 1A.6.2R (Limitation for benchmark firms) (COCON 1.3.17G COCON 1B.3.17G deals with this). COCON does not cover private or personal life 1.3.2 1B.3.2 G COCON 1.1.6R to COCON 1.1.7R limit COCON 1A.5 (To what conduct does it apply? Basic provisions) limits the application of COCON to conduct that relates to a function carried out by a member of the conduct rules staff where in turn that function relates to the carrying on of an activity by the firm. The firm’s activity may be a regulated activity or an unregulated activity. This limitation on the scope of COCON applies in relation to all firms. 1.3.3 1B.3.3 G (1) The effect of COCON 1.1.6R to COCON 1.1.7R COCON 1A.5 is that conduct relating to the conduct rules staff member’s private or personal life is outside the scope of COCON. (2) However, this does not mean that a senior conduct rules staff member is not required to disclose information about their private or personal life under COCON 2.2.4R (SC4). A senior conduct rules staff member should disclose such matters if they are material to an assessment of fitness and propriety under FIT. COCON 4.2.33G (SC4: You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice) gives examples of matters that should be disclosed. 1.3.4 1B.3.4 G Factors that point towards conduct being within the scope of COCON 1.1.6R to COCON 1.1.7R COCON 1A.5 include:
(1) the conduct occurred when the conduct rules staff member was present on the firm’s premises; (2) the conduct occurred when the conduct rules staff member was working on the firm’s business; (3) the conduct involved a client, a professional acquaintance, another member of the firm’s staff or someone the conduct rules staff member had dealt with on behalf of their firm;

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(4) the conduct was carried out using equipment supplied by or made available by the firm or by involving the firm’s staff; (5) the conduct arose in a business context, including an official or an informal event organised or supported by the firm or in which the firm participates, whether it is held at the firm’s premises or at another location; (6) the position of the conduct rules staff member as a conduct rules staff member of the firm helped them to carry out the conduct; or (7) the purpose (misguided or not) of the conduct was to benefit the firm. 1.3.5 1B.3.5 G (1) Whether conduct is within the scope of COCON depends on the specific facts of each case. It is therefore not possible to set out scenarios in the Handbook and say whether in all cases the conduct in question will be within the scope of COCON. (2) Paragraph (1) means that:
(a) the list of factors in COCON 1.3.4G COCON 1B.3.4G is not exhaustive; and (b) the presence or absence of one of the factors in COCON 1.3.4G COCON 1B.3.4G is not by itself conclusive. (3) Another result of (1) is that:
(a) when the table in COCON 1.3.7G COCON 1B.3.7G says that conduct is generally within the scope of COCON, that means that the facts of the scenario are ones that point towards the conduct coming within the scope of COCON; and (b) when the table in COCON 1.3.7G COCON 1B.3.7G says that conduct is generally outside the scope of COCON, that means that the facts of the scenario are ones that point against the conduct coming within the scope of COCON, but that in an individual case all the other features of the case are also relevant. 1.3.6 1B.3.6 G (1) The table in COCON 1.3.7G COCON 1B.3.7G sets out examples of when a person’s conduct is outside the scope of COCON because it is
part of their private or personal life and when it is not excluded for that
reason (subject to COCON 1.3.5G COCON 1B.3.5G).
(2) As explained in Note (2) to the table, conduct to which ‘Yes’ applies is not necessarily within the scope of COCON as it may be excluded by

FCA 202X/YY one of the other scope rules in COCON 1.1 (Application) this chapter. For example, it may be excluded by the exclusion in COCON 1.1.7AR (To what conduct does it apply? (Other limitations: Non-banks)) COCON 1A.6.1R (General limitation for non-banks). (3) Another example of the point in (2) is that if M (as referred to in the notes to the table) is based in an overseas office of the firm and carries out the conduct from there (or from their home in the country where the overseas office is located), the conduct will be outside the scope of COCON under COCON 1.1.10R (Where does it apply?) COCON 1A.9.2R (Territorial scope: Basic rules) unless M comes within COCON 1.1.9R COCON 1A.9.1R (which deals with senior conduct rules staff members and material risk takers) or within COCON 1.1.10R(2)(b) COCON 1A.9.2R(2)(b) (which deals with clients in the United Kingdom). 1.3.7 1B.3.7 G Table: Private or personal life and COCON Description of conduct Whether generally within the scope of COCON 1.1.6R to COCON 1.1.7R COCON 1A.5 Misconduct by M in relation to a fellow member of the workforce while both are on their firm’s premises. Yes Misconduct by M in relation to a fellow member of the workforce while M is working remotely for their firm. Yes Misconduct by M in relation to a family member while M is working remotely for their firm. No Misconduct by M in relation to a member of the public while M is commuting to or from their firm’s place of business for work. No Misconduct by M in relation to a fellow member of the workforce when both are travelling to a Yes

FCA 202X/YY meeting in which they will represent their firm. Misconduct by M in relation to a client at a business meeting in which M is representing their firm. Yes Misconduct by M in relation to a fellow member of the workforce at a social occasion organised by their firm. Yes Misconduct by M in relation to a fellow member of the workforce at a social occasion organised by M or another member of the workforce in their personal capacity. No However:
(1) An occasion organised by a manager may be within the scope of COCON, taking into account that the manager’s direct reports may feel obliged to attend. (2) If the event takes place after a firm event but at a separate location or venue, it may be within the scope of COCON if it is a continuation of the first event or if the conduct started at the first event and continued in the new venue. Otherwise, COCON is likely to cease to apply because the connection between the event and the activities of the firm has been lost. Misconduct by M at a social occasion, a meeting, a round table, an awards ceremony, a training course or a workshop, in each case organised by a client of their firm, another firm, an industry body, a training organisation or a regulator, in which they will represent their firm or where the main reason for the invitation is their working for their firm. Yes M is a member of a profession (such as an accountant, actuary or lawyer) and practises that profession in their job with their Yes

FCA 202X/YY firm. M carries out misconduct at an event organised by a third party to meet the professional requirements of that profession or by the regulator of that profession. M publishes material on a personal social media account (including sending it on a messaging app) held by M. As this table only covers whether conduct takes place in M’s private life (and hence is outside the scope of COCON under COCON 1.1.6R to COCON 1.1.7R COCON 1A.5), this example assumes that the publication would otherwise breach COCON. This is an example of how it is not possible to give a definitive answer to a scenario based on a single element. Factors to take into account include:

whether the material is directed at a
fellow member of the workforce (if it is, that points towards the conduct being within scope);
whether there is another connection
between M and the subject of the misconduct that is not based on M’s work with their firm (if there is such a connection, that may point away from the application of COCON);
whether it is part of a course of
conduct that includes other incidents that are more closely connected with M’s work at the firm;
whether the content of the social
media posts is related to work at the firm;
whether M uses a work-issued
device.
The fact that M uploads the posts during working hours or while on the firm’s premises is not a strong factor pointing towards the application of COCON. If the conduct takes place over the firm’s systems (for instance through the firm’s e-mail system) it is likely to be within the scope of COCON. Notes (1) ‘M’ refers to the member of a firm’s conduct rules staff carrying out the conduct in question. (2) ‘Yes’ means that, in accordance with COCON 1.3.5G(3)(a) COCON 1B.3.5G(3)(a), the scenario is based on a factor that points towards the

FCA 202X/YY conduct being within COCON 1.1.6R to COCON 1.1.7R COCON 1A.5 and thus within the scope of COCON unless excluded by COCON 1.1.1AR to COCON 1.1.5AR (To whom does it apply?) COCON 1A.2 (To whom does it apply? (Main rules)) or COCON 1A.3 (To whom does it apply? (Supplemental rules)), COCON 1.1.7AR COCON 1A.6 (To what conduct does it apply? (Other limitations: Non-banks)) to COCON 1.1.7FR COCON 1A.8 (To what conduct does it apply? (Supplemental rules)) or by COCON 1.1.8BR to COCON 1.1.11CR (Where does it apply?) COCON 1A.9 (Where does it apply? (Basic rules)) or COCON 1A.10 (Where does it apply? (Supplemental rules)). (3) ‘No’ means that, in accordance with COCON 1.3.5G(3)(b) COCON 1B.3.5G(3)(b), the scenario is based on a factor that points towards the conduct being outside COCON 1.1.6R to COCON 1.1.7R COCON 1A.5 and thus outside the scope of COCON. 1.3.8 1B.3.8 G However, conduct excluded from COCON as described in the table in COCON 1.3.7G COCON 1B.3.7G can still be relevant to fitness and propriety, as described in FIT 1.3 (Assessing fitness and propriety). 1.3.9 1B.3.9 G The scope of COCON is not limited to conduct that is authorised by the firm or carried out with a view (misguided or not) that it is for the firm’s benefit. Conduct is not excluded from the scope of COCON just because the firm forbids it (for instance, in a staff handbook) or it is calculated to harm the firm. Thus, for example, the following conduct is within the scope of COCON 1.1.6R to COCON 1.1.7R COCON 1A.5:
(1) misappropriating a client’s or the firm’s assets; (2) providing false or inaccurate details about the member of the conduct rules staff’s training, qualifications, past employment record or experience; (3) misusing the assets or confidential information of a client or the firm to make a personal profit; (4) misconduct against a client; (5) harassment of a fellow member of the workforce; and (6) maliciously sabotaging a firm’s information technology systems or altering or erasing its data. SMCR financial activities
1.3.10 G COCON 1.3.11G COCON 1B.3.11G to COCON 1.3.16G COCON 1B.3.16G
deal with a conduct rules staff member for whom the scope of COCON is

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1B.3.10 limited to conduct in relation to their firm’s SMCR financial activities by COCON 1.1.7AR COCON 1A.6.1R. 1.3.11 1B.3.11 G When COCON is restricted to SMCR financial activities, it covers more than conduct involving direct dealings with counterparties and customers (and potential ones) or their assets at the point of sale or at the time of the transaction or service. It can also cover matters such as the following:
(1) conduct arising out of such direct dealings, such as record-keeping, valuations and reporting; (2) after-sale or post-transaction activities such as settlement, queries, dealing with the exercise of rights by the firm or the customer, complaints, cancellations, renewals and generally dealing with the customer or counterparty through the lifecycle of the product or relationship; (3) designing and operating policies and procedures relating to the conduct of the firm’s relationship with counterparties and customers, such as:
(a) product or services design;
(b) policies and procedures about what services and products to sell or buy; (c) policies and procedures about product distribution; (d) policies and procedures for the conduct of the relationship between the firm and a customer in relation to products and services already sold or delivered; and (e) policies and procedures for the monitoring of customer outcomes for products and services already sold or delivered; and (4) management and monitoring of these activities. 1.3.12 1B.3.12 G COCON is not restricted to the activities in COCON 1.3.11G COCON 1B.3.11G. For example, it covers:
(1) participation in meetings of the firm’s governing body and its committees and other management forums; (2) conduct in relation to internal systems, controls and operations supporting the activities in COCON 1.3.11G COCON 1B.3.11G;

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(3) conduct in relation to acquisition and management of resources used to support the activities in COCON 1.3.11G COCON 1B.3.11G; and (4) conduct in relation to systems and controls to monitor and control risks such as liquidity, operational, solvency, market and trading risks. 1.3.13 1B.3.13 G (1) Conduct of an individual is not within the scope of COCON just because it is carried on in relation to an activity of their firm that is connected to an SMCR financial activity that is carried on by the firm but that is not itself an SMCR financial activity. (2) For example, the misconduct of the employee in the following examples is not within the scope of COCON:
(a) A firm’s main business is to sell physical goods. It sells some of them on credit and so has permission for consumer credit. An employee steals some of the firm’s stock. (b) A firm’s main business is to sell cars. It also sells connected insurance and so has permission for insurance distribution activities. An employee commits a serious driving offence while moving one of the cars the firm sells. (3) However, conduct in (2) is relevant to the fitness and propriety under FIT of the employee, if the employee is subject to FIT. 1.3.14 1B.3.14 G (1) COCON 1.1.7FR COCON 1A.7.1R says that the restriction of the scope of COCON to conduct in relation to a firm’s SMCR financial activities under COCON 1.1.7AR COCON 1A.6.1R does not apply to harassment or similar conduct in relation to a fellow member of the workforce. Instead, COCON 1.1.7FR(5) COCON 1A.7.1R(5) excludes such conduct if it clearly only relates to a part of the firm’s business that does not carry on regulated activities or other SMCR financial activities, as illustrated further in the table in COCON 1.3.15G COCON 1B.3.15G. (2) COCON 1.3.15G COCON 1B.3.15G gives examples of how the exclusion in COCON 1.1.7FR(5) COCON 1.1.7FR(5) COCON 1A.7.1R(5) applies to conduct of a conduct rules staff member in relation to a fellow member of the workforce when a firm has both a financial services business and a non-financial services business. (3) The example relates to internal audit. The example corresponds to the example in SYSC 25.3.4G (Management responsibilities maps:
Exclusion of non-financial services activities for some firms).
1.3.15 G Table: Application of COCON to a firm with mixed businesses

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1B.3.15
Description of business Whether generally within the scope of COCON (1) F’s internal audit function covers its entire business without separating the parts that deal with its financial services business and its other business. The conduct rules staff member carrying out the misconduct and the subject of the misconduct work in the internal audit function. The conduct is within scope. (2) Same as (1) except that the subject of the misconduct works outside the internal audit function. The conduct is within scope even if the subject of the misconduct works for the non-financial services part of the business. (3) F separates the part of its internal audit function that deals with its financial services business from the part that deals with the other part of its business. Both the conduct rules staff member carrying out the misconduct and the subject of the misconduct work in the part of the internal audit function that does not deal with the financial services business. The conduct is outside scope. It would be within scope if either the conduct rules staff member carrying out the conduct or the subject of the conduct work in the
part of the internal audit function
that deals with the financial services business.
(4) F’s internal audit function covers its entire business as described in (1). Within the function, certain individuals deal with the financial services business, and other individuals deal with the nonfinancial services business. The conduct rules staff member carrying out the misconduct deals with the financial services part of F’s business and the subject of the misconduct deals with the non-financial services business or vice versa. The conduct is within scope. (5) F’s internal audit function covers F’s and the rest of its group’s entire business without separating the parts The conduct is within scope.

FCA 202X/YY that deal with the group’s financial services business and the group’s other business. The conduct rules staff member carrying out the misconduct works in the internal audit function and the subject of the misconduct works in another company in F’s group. (6) F’s internal audit function covers the whole of its group’s activities. F separates the part of the internal audit function that deals with the group’s financial services business from the part that deals with the other part of the group’s business. The conduct rules staff member carrying out the misconduct works in the part of the internal audit function that does not deal with the financial services business. The subject of the misconduct works in another company in the firm’s group. The conduct is outside scope. It is outside scope even if the subject of the misconduct’s job involves SMCR financial activities carried out by another company in F’s group. This is because, even if the conduct relates to SMCR financial activities, it does not relate to SMCR financial activities carried on by F. Notes (1) When the table says that conduct is outside scope, that means that COCON 1.1.7FR COCON 1A.7.1R does not apply and instead COCON 1.1.7AR or COCON 1.1.7BR COCON 1A.6 applies. (2) When the table says that conduct is within scope, that means that COCON 1.1.7FR COCON 1A.7.1R applies and the conduct is within the scope of COCON unless excluded by COCON 1.1.1AR to COCON 1.1.5AR (To whom does it apply?) COCON 1A.2 (To whom does it apply? (Main rules)) or COCON 1A.3 (To whom does it apply? (Supplemental rules)), COCON 1.1.6R to COCON 1.1.7R (To what conduct does it apply? (Limitations in the Act)) COCON 1A.5 (To what conduct does it apply? Basic provisions) or by COCON 1.1.8BR to COCON 1.1.11CR (Where does it apply?) COCON 1A.9 (Where does it apply? (Basic rules)) or COCON 1A.10 (Where does it apply? (Supplemental rules)). (3) See COCON 4.3.16G (Subject of the misconduct) for the meaning of the phrase ‘subject of the conduct’. (4) ‘F’ refers to the firm for which the member of the conduct rules staff carrying out the conduct in question works.

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1.3.16
1B.3.16
G The flow diagram in COCON 4 Annex 1 3.7G gives further guidance on how COCON 1.1.7FR COCON 1A.7.1R works. Benchmark firms 1.3.17 1B.3.17 G COCON 1.1.7FR COCON 1A.7.1R also applies to a pure benchmark SMCR firm to which the restrictions in COCON 1.1.7BR COCON 1A.6.2R apply. The flow diagram in COCON 4 Annex 1 3.7G gives further guidance on how COCON 1.1.7FR COCON 1A.7.1R works for such a firm. Amend the following as shown. 2 Individual conduct rules …
2.3 Firms: training awareness of staff and breaches
2.3.1 G
R
(1) This section applies to SMCR firms.
(2) Under section 64B of the Act, an An SMCR firm must ensure that all persons subject to the rules in COCON are notified of:
(1)
(a) ensure that all persons subject to the rules in COCON are notified of the rules in COCON that apply to them; and (2) (b) take all reasonable steps to ensure that those persons understand how the consequences of a breach of those rules in COCON apply to them.
2.3.2 G (1) The steps that an SMCR firm must take to ensure that its conduct rules
staff understand how the rules in COCON apply to them include the provision of suitable training. [deleted] (2) Suitable training should always ensure that those who are subject to the rules in COCON have an awareness and broad understanding of all of the rules in COCON, and that they also have a deeper understanding of the practical application of the specific rules which are relevant to their work. (3) For example:
(a) for individuals who trade in the markets, rule 5 in COCON 2.1.5R may apply in various circumstances arising in the

FCA 202X/YY individual’s day-to-day activities and additional training may be appropriate to ensure that the individual knows how that rule applies to those activities in those various circumstances; or (b) for individuals who deal directly with customers, rule 4 in COCON 2.1.4R may apply in various circumstances which makes additional training appropriate for such individuals. … 4 Specific guidance on conduct rules
4.1 Specific guidance on individual conduct rules
…
Acting with due skill, etc as a manager (rule 2): General …
4.1.8 G The following is a non-exhaustive list of examples of conduct by a manager that
would be in breach of rule 2.
…
(3) Failing to take reasonable steps to maintain an appropriate level of understanding about an issue or part of the business that the manager has delegated to an individual or individuals (whether in-house or outside contractors). However, maintaining an appropriate level of understanding does not require a detailed or technical understanding of all aspects of the delegated activity. The appropriate level will depend on:
(a) the materiality and risk of the activity; (b) the competence and seniority of the delegate; and (c) the effectiveness of the firm’s governance and reporting arrangements. …
4.2 Specific guidance on senior manager conduct rules
…
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

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…
4.2.20 G Senior conduct rules staff members will not always manage the business on a
day-to-day basis themselves. The extent to which they do so will depend on a number of factors, including the nature, scale and complexity of the business and their position within it. The larger and more complex the business, the greater the need for clear and effective delegation and reporting lines, which may involve documenting the scope of that delegation and the reporting lines in writing. The FCA will look to the senior conduct rules staff member to take reasonable steps to ensure that systems are in place to ensure that issues are being addressed at the appropriate level. When issues come to their attention, they should deal with them in an appropriate way. The FCA recognises that, particularly in large or complex firms, senior conduct rules staff members may delegate the day‑to‑day management of substantial parts of the business, including matters for which they have overall responsibility. In these circumstances, compliance with SC3 does not require the senior conduct rules staff member to be involved in the routine or operational management of the delegated activities, provided that:
(1) the delegation framework is appropriate having regard to the nature, scale and complexity of the business; and (2) the senior conduct rules staff member maintains oversight at a level commensurate with the risks of the activity, but this does not require detailed operational involvement. 4.2.20A G The FCA would not generally expect a senior conduct rules staff member to:
(1) review all decisions taken under delegated authority; or (2) replicate the role of the delegate. 4.2.20B G The larger and more complex the business, the greater the need for clear and effective delegation and reporting lines, which may involve documenting the scope of that delegation and the reporting lines in writing. The FCA will look to the senior conduct rules staff member to take reasonable steps to ensure that systems are in place to ensure that issues are being addressed at the appropriate level. When issues come to their attention, they should deal with them in an appropriate way. …
4.2.23 G …
4.2.23A G Examples of behaviour in relation to delegation that is consistent with rule SC3 may include:

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(1) delegating responsibility for a business unit to a suitably senior head of function and exercising oversight primarily through management information, governance forums, risk committees or control functions without involvement in day‑to‑day decisions; or (2) relying on group or shared service functions where appropriately governed. … SC4: You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice …
4.2.33 G Rule SC4 is not limited to information about the SMF manager’s firm. It also
covers information about the SMF manager themselves. As explained in COCON 1.3.3G(2) COCON 1B.3.3G(2), this includes matters relating to the SMF manager’s personal life as well as their work life. For example, the SMF manager should disclose the following to the FCA:
…
4.3 Specific guidance on harassment
…
Summary
4.3.3 G COCON 3.1 (General factors for assessing compliance) is the starting point for
deciding whether there has been a breach of COCON. Subject to that, behaviour of the kind in COCON 4.3.1G is a breach of Individual Conduct Rule 1 or Individual Conduct Rule 2 if:
(1) the conduct is of the type described in COCON 1.1.7FR(4) COCON 1A.7.1R(4); and … … Application to banks
4.3.5 G …
(2) This section cross refers to COCON 1.1.7FR COCON 1A.7.1R (To what conduct does it apply? (Other limitations: Non-banks:

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Harassment)) even though that rule does not apply to an SMCR banking firm. (3) The reason that this section cross-refers to that rule in the case of SMCR banking firms as well as other kinds of SMCR firm is that behaviour of the kind in COCON 4.3.1G is only capable of coming within COCON if it is of a kind described in COCON 1.1.7FR(4) COCON 1A.7.1R(4). This is the case for both an SMCR banking firm and for any other kind of SMCR firm. (4) Therefore this section applies COCON 1.1.7FR(4) COCON 1A.7.1R(4) to an SMCR banking firm as guidance for the purpose of this section. (5) The rest of COCON 1.1.7FR COCON 1A.7.1R is not relevant to an SMCR banking firm. Harassment
4.3.6 G The factors to take into account in deciding whether conduct comes within
COCON 1.1.7FR(4) COCON 1A.7.1R(4) include:
…
Seriousness
4.3.7 G COCON 1.1.7FR(4) COCON 1A.7.1R(4) only covers conduct that is serious.
…
Effect of the conduct
4.3.12 G In deciding whether conduct has the effect in COCON 1.1.7FR(4)(a) COCON
1A.7.1R(4)(a), it is necessary to take into account all the circumstances of the case. COCON 4.3.13G and COCON 4.3.14G cover 2 factors that are always relevant.
4.3.13 G One of those factors is the perception of the subject of the misconduct. The
result of this subjective question is that if the subject of the conduct does not perceive their dignity to have been violated, or any of the other things referred to in COCON 1.1.7FR(4)(a) COCON 1A.7.1R(4)(a) to have occurred, then the conduct should not be found to have had that effect.
4.3.14 G The second of the factors referred to in COCON 4.3.12G is whether it is
reasonable for the conduct to have had the effect in COCON 1.1.7FR(4)(a) COCON 1A.7.1R(4)(a). The result of this objective question is that if it was not reasonable for the conduct to be regarded as violating the dignity of the subject of the conduct or creating any of the other effects in COCON 1.1.7FR(4)(a) COCON 1A.7.1R(4)(a), then it should not be found to have done so.

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Purpose of the conduct
4.3.15 G The purpose of conduct as well as its effect is relevant to whether it is of the
type described in COCON 1.1.7FR(4)(a) COCON 1A.7.1R(4)(a). COCON 1.1.7FR(4)(a) COCON 1A.7.1R(4)(a) covers conduct whose purpose is to violate dignity or to cause any of the other effects described in that rule even if the conduct does not actually have that effect. For example, a person may breach COCON if they send a hostile and intimidatory communication that is intercepted by the employing firm before it is received by the person to whom it is sent. Subject of the misconduct
4.3.16 G (1) If behaviour has the effect described in COCON 1.1.7FR(4)(a) COCON
1A.7.1R(4)(a) on an individual listed in COCON 1.1.7FR(3) COCON 1A.7.1R(3), it can still be a breach of COCON if it is targeted at someone else or it is not targeted at anyone. … Single incident
4.3.17 G Conduct can come within COCON 1.1.7FR(4) COCON 1A.7.1R(4) whether it
consists of a single incident, several incidents or a course of conduct. Physical acts
4.3.18 G Conduct within COCON 1.1.7FR(4) COCON 1A.7.1R(4) covers a wide range
of behaviour. It is not limited to words, communications and gestures. For example, it can also cover physical violence. Individual Conduct Rule 1 …
4.3.20 G While this section does not set out a complete explanation of what integrity
means, one consequence of COCON 4.3.19G is that misconduct in relation to a fellow member of the workforce falls outside the scope of rule 1 if the conduct rules staff member:
…
(2) did not intend to have an effect on the subject of the misconduct of the kind described in COCON 1.1.7FR(4) COCON 1A.7.1R(4), did not know that they were doing so and was not reckless about the effect of their conduct.

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…
Individual Conduct Rule 2
4.3.23 G …
(2) For example, a conduct rules staff member carrying out conduct falling within COCON 1.1.7FR(4)(a) COCON 1A.7.1R(4)(a) will not breach the rule if a reasonable person with the skills that the conduct rules staff member carrying out the conduct has and ought to have:
(a) would have thought that the conduct would not have the effects described in COCON 1.1.7FR(4) COCON 1A.7.1R(4) on the subject of the conduct; or … Repeated conduct
4.3.24 G …
(2) Nevertheless, repeated instances of the same misconduct could make it less likely that the conduct rules staff member did not know that it would have the effects described in COCON 1.1.7FR(4) COCON 1A.7.1R(4) (in the case of Individual Conduct Rule 1) or that it would be reasonable to believe that (Individual Conduct Rule 2). … … 4 Annex 1 How COCON applies to harassment
Section 1: Purpose of this Annex and introduction
…
4 Annex
1 1.3
G In this Annex:
…
(3) ‘the harassment rule’ means COCON 1.1.7FR COCON 1A.7.1R. 4 Annex 1 1.4 G This Annex deals with the 3 sets of rules in COCON 1.1 COCON 1A (Who?, What? and Where?) in the same order as COCON 1.1 COCON 1A. However, a person wanting to see whether conduct is within the scope of COCON can apply them in any order. For example, if conduct takes place outside the UK, a person may wish to apply the territorial scope rules first. If

FCA 202X/YY the answer is that the conduct is outside the territorial scope of COCON, COCON does not apply and there is no need to look at any other part of COCON 1.1 COCON 1A. 4 Annex 1 1.5 G This Annex is based on the flow diagrams in COCON 1 Annex 2 COCON 1A Annex 2 (How the application rules in COCON 1.1 COCON 1A (Application and purpose) work) with parts not relevant to the harassment rule removed and with more detail about harassment added.
Section 2: Who does COCON apply to?
…
4 Annex
1 2.2
G Flow diagram: Who COCON applies to
[Editor’s note: The flow diagram is unamended except for the following amendments to the text in the boxes:

References to the table in COCON 1.1.2R are to the table in COCON 1A.2.2R.
References to row 6 of the table in COCON 1.1.2R are to row 4 of Part A of the table in
COCON 1A.2.2R.]
Section 3: What does COCON apply to?
…
4 Annex 1
3.4
G Flow diagram: Conduct COCON applies to: Flow diagram applying to all firms [Editor’s note: The flow diagram is unamended except for the following amendment to the text in the boxes:
The reference to COCON 1.1.6R to COCON 1.1.7R is to COCON 1A.5.]
4 Annex 1
3.5
G COCON 1.3.2G COCON 1B.3.2G to COCON 1.3.9G COCON 1B.3.9G contain guidance on COCON 1.1.6R to COCON 1.1.7R COCON 1A.5 as referred to in the flow diagram in COCON 4 Annex 1 3.4G. 4 Annex 1 3.6 G … (2) COCON 1.1.7FR(3) COCON 1A.7.1R(3) (To what conduct does it apply? (Other limitations: Non-banks: Harassment)) deals with that restriction in the case of an SMCR firm that is not an SMCR banking

FCA 202X/YY firm and that restriction is reflected in the flow diagrams in this
Annex.
(3) COCON 1.1.7FR(3) COCON 1A.7.1R(3) does not apply to an SMCR banking firm. In the case of an SMCR banking firm, the rules in COCON do not have a restriction based on whether conduct relates to a work colleague. Therefore, the flow diagrams in this Annex do not reflect the restriction of the scope of this Annex described in (1) in the case of an SMCR banking firm. 4 Annex 1 3.7 G Flow diagram: Conduct COCON applies to: Firms other than SMCR banking firms [Editor’s note: The flow diagram is unamended except for the following amendment to the text in the boxes:

The reference to COCON 1.1.7FR(3) is to COCON 1A.7.1R(3).]
…
4 Annex 1
3.10
G Flow diagram: Where the harassment rule does not apply [Editor’s note: The flow diagram is unamended except for the following amendments to the text in the boxes:
The reference to COCON 1.1.7BR(3) is to COCON 1A.6.2R(3).
The reference to COCON 1.1.7AR(2)(b) is to COCON 1A.6.1R(2)(b).]
Section 4: Territorial scope of COCON
…
4 Annex 1
4.2
G Flow diagram: Territorial scope
[Editor’s note: The flow diagram is unamended except for the following amendments to the text in the boxes:
The reference to COCON 1.1.10R(2)(a) is to COCON 1A.9.2R(2)(a).
The reference to COCON 1.1.10R(2)(b) is to COCON 1A.9.2R(2)(b).]
Section 5: Final questions

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…
4 Annex 1
5.2
G Flow diagram: Remaining questions
[Editor’s note: The flow diagram is unamended except for the following amendments to the text in the boxes:

The reference to COCON 1.1.7FR(4)(a) is to COCON 1A.7.1R(4)(a).
The reference to COCON 1.1.7FR(4)(b) is to COCON 1A.7.1R(4)(b).]
4 Annex 1
5.3
G COCON 4.3.6G to COCON 4.3.18G deal with whether conduct is of the kind described in COCON 1.1.7FR(4)(a) COCON 1A.7.1 R(4)(a). 4 Annex 1 5.4 G COCON 4.3.17G to COCON 4.3.18G deal with aspects of whether conduct is of the kind described in COCON 1.1.7FR(4)(b) COCON 1A.7.1 R(4)(b). …

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Annex D
Amendments to the Threshold Conditions sourcebook (COND) In this Annex, underlining indicates new text and striking through indicates deleted text. 2 The threshold conditions …
2.5 Suitability
…
Paragraph 3D to Schedule 6 of the Act
…
2.5.3 G (1) The emphasis of the threshold conditions set out in paragraphs 2E
and 3D of Schedule 6 of the Act is on the suitability of the firm itself. The suitability of each person who performs a controlled function will be assessed by the FCA and/or the PRA, as appropriate, under the approved persons regime (in relation to an FCA-approved person, see SUP 10A (FCA Approved Persons in Appointed Representatives), SUP 10C (FCA senior managers regime for approved persons in SMCR firms) and FIT). In certain circumstances, however, the FCA may consider that the firm is not suitable because of doubts over the individual or collective suitability of persons connected with the firm. … …
2.5.6 G Examples of the kind of particular considerations to which the FCA may
have regard when assessing whether a firm will satisfy, and continue to satisfy, this threshold condition include, but are not limited to, whether:
…
(7) the firm has put in place procedures which are reasonably designed to:
…
(b) ensure that its approved persons approved or notified persons and the rest of its conduct rules staff are aware of those requirements and standards under the regulatory

FCA 202X/YY system applicable to them, whether or not they are employed by the firm; … (d) determine that its approved persons approved or notified persons and the rest of its conduct rules staff, are adhering to those requirements and standards; … …

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Annex E
Amendments to the Fit and Proper test for Employees and Senior Personnel sourcebook (FIT) In this Annex, underlining indicates new text and striking through indicates deleted text. 1 General
1.1 Application and purpose
1.1.1 G FIT applies to:
(1) an SMCR firm;
(2) an applicant for Part 4A permission that will be an SMCR firm if the application succeeds; and … (4) an approved person performing an FCA controlled function; a person whose fitness and propriety is assessed as described in the
table in FIT 1.1.5G.
(5) a candidate for an FCA controlled function; [deleted] (6) a certification employee performing an FCA certification function; [deleted] (7) a person whom an SMCR firm is proposing to certify to perform an FCA certification function; and [deleted] (8) a board director as set out in FIT 1.1.2G(1)(e). [deleted]
1.1.2 G The purpose of FIT is to set out and describe the criteria that:
(1) an SMCR firm should consider when: for the purposes described in
Part A of the table in FIT 1.1.5G; and
(a) assessing the fitness and propriety of a candidate whom the firm is proposing to put forward for approval as an FCAapproved SMF manager; (b) assessing the continuing fitness and propriety of a person approved to perform the function of an FCA-approved SMF manager, including for formulating an opinion about whether there are any grounds on which the regulator could withdraw

FCA 202X/YY the approval given to that individual to perform that function under section 63(2A) of the Act; (c) assessing the fitness and propriety of a person whom the firm is proposing to certify to perform an FCA certification function; (d) assessing the continuing fitness and propriety of a person whom the firm has certified to perform an FCA certification function; and (e) (in the case an FCA-authorised person that is not a limited scope SMCR firm) assessing the fitness of a non-SMF board director under the competent employees rule, any onshored regulation, SYSC 23.4.1AR (Checks for certain directors) or any other requirement of the regulatory system. (2) the FCA will or may consider for the purposes described in Part B of the table in FIT 1.1.5G when assessing the fitness and propriety of a candidate for a controlled function, including a designated senior management function (see generally SUP 10A and SUP 10C on approved persons), and may consider when assessing the continuing fitness and propriety of approved persons. …
1.1.4 G …
1.1.5 G Table: fitness and propriety requirements covered by FIT
Part A: Assessment of fitness and propriety requirement by an SMCR firm
Person being assessed and purpose of assessment Background in the Act and Handbook Assessing the fitness and propriety of a candidate whom the firm is proposing to put forward for approval as an FCA-approved or notified person. Under section 60A(1) of the Act, before a firm may make an application for the FCA’s approval of a controlled function, the firm must be satisfied that the person for whom the application is made is a fit and proper person to perform that function. Assessing the fitness and propriety of a person in respect of whom the firm is proposing to make an SMF notification to the FCA. Under section 60A(1) of the Act, before a firm may make an SMF notification to the FCA, the firm must be satisfied that the person in respect of whom the notification is made is a

FCA 202X/YY fit and proper person to perform the controlled function in question. Assessing the continuing fitness and propriety of an approved or notified person. This includes making an assessment for the purpose of formulating an opinion about whether there are any grounds on which the FCA could withdraw the approval, or invalidate the notification, in respect of that person under section 63(2A) of the Act. (In the case of an FCA-authorised person that is not a limited scope SMCR firm) assessing the fitness of a non-SMF board director. The assessment is required by SYSC 23.4.1AR (Checks for certain directors). A firm should ensure that an individual appointed as described in SUP 10C.3A.6R(1) is fit and proper to perform that role. This refers to a temporary replacement for an SMF manager appointed under SUP 10C.3A (The 18-week rule). The fitness requirement is in SUP 10C.3A.13R. As described in that
section, the fitness assessment may take into
account the temporary nature of the appointment.
Part B: Assessment of fitness and propriety requirement by the FCA
Assessing the fitness and propriety of a candidate whom a firm has put forward for approval as an FCA-approved or notified person. Under section 61(1) of the Act (Determination of applications), the FCA may grant an application for approval made under section 60 (Applications for approval) of the Act only if it is satisfied that the candidate is fit and proper to perform the controlled function to which the application relates. This row does not apply to a candidate who is subject to an SMF notification. The effectiveness of an SMF notification is not subject to the FCA reaching any view about the fitness and propriety of the SMF manager to perform the function. Assessing the continuing fitness and propriety of an approved or notified person. FIT sets out factors that the FCA may consider when assessing the continuing fitness and propriety of approved or notified person. Formulating an opinion about whether there are any grounds on which the FCA could withdraw the approval, or invalidate the notification, in respect of an approved or Under section 63(1) of the Act (Withdrawal of approval or invalidation of notification), the FCA may withdraw an approval or invalidate a notification given by or to the FCA or the

FCA 202X/YY notified person under section 63(2A) of the Act. PRA under section 59 if it considers that the person is not a fit and proper person to perform the controlled function.
1.2 Introduction
1.2.-1 G Under section 60A(1) of the Act, before a firm may make an application for the FCA’s approval of a controlled function the firm must be satisfied that the person for whom the application is made is a fit and proper person to perform that function. [deleted]
1.2.1 G Under section 61(1) of the Act (Determination of applications), the FCA
may grant an application for approval made under section 60 (Applications for approval) of the Act only if it is satisfied that the candidate is fit and proper to perform the controlled function to which the application relates. [deleted] 1.2.1A G Under section 63F of the Act, a firm may issue a certificate to a person to perform a certification function only if it is satisfied that the person is a fit and proper person to perform that function. [deleted] 1.2.1B G Under sections section 60A and 63F of the Act, in assessing whether a person is a fit and proper person to perform an FCA designated senior management function or an FCA certification function, a firm must have particular regard to whether that person:
…
…
1.2.3A G Under section 63(1) of the Act (Withdrawal of approval), the FCA may withdraw an approval under section 59 given by the FCA or the PRA in relation to the performance by a person of a function if it considers that the person is not a fit and proper person to perform the function. [deleted] …
1.3 Assessing fitness and propriety
General matters
…
1.3.4A G A firm assessing the continuing fitness and propriety of an approved person approved or notified person is required to notify the FCA under section 63(2A) of the Act if it forms the opinion that there are grounds on which the FCA could withdraw its approval (see SUP 10C.14.24R SUP

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10C.14.24G). In discharging its obligation to notify the FCA, a firm should take into account how relevant and how important the matter is that comes to its attention which suggests an approved person approved or notified person might not be fit and proper before determining that a notification should be made. 1.3.4AA G In relation to a firm assessing continuing fitness and propriety of an approved person approved or notified person under section 63(2A) of the Act during a temporary absence, see the guidance at SUP 10C.14.5GG. … Relevance of behaviour in private or personal life
1.3.15 G (1) COCON is limited to conduct related to a firm’s activities (see
COCON 1.1.6R to COCON 1.1.7R COCON 1.5 (To what conduct does it apply? Basic provisions)) and sometimes only to a part of its activities (for example, see COCON 1.1.7AR COCON 1A.6.1R). An assessment of fitness and propriety should not be limited in that way. (2) That means that conduct is potentially relevant to an assessment of fitness and propriety even though COCON 1.3 COCON 1B.3 (Scope of COCON) says that it is generally outside the scope of COCON because:
…
(3) For example, conduct described in the table in COCON 1.3.7G COCON 1B.3.7G (Table: Private or personal life and COCON) as generally being outside the scope of COCON may be relevant to fitness and propriety. …

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Annex F
Amendments to the Training and Competence sourcebook (TC) In this Annex, striking through indicates deleted text unless otherwise specified. 2 Competence
2.1 Assessing and maintaining competence
…
Exemption from appropriate qualification requirements
2.1.9 R …
(2) The conditions are that a firm should be satisfied that an employee:
… but (b) and (c) do not apply to an employee who is benefiting from the “30-day rule” exemption in SUP 10A.10.8R or the “30-day rule” exemption in SYSC 27.5.3R, unless the employee benefits from that rule because they are giving personal recommendations to retail clients on retail investment products, are providing advice on P2P agreements to retail clients or are a broker fund adviser. … …

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Annex G
Amendments to the General Provisions sourcebook (GEN) In this Annex, underlining indicates new text and striking through indicates deleted text. 1 FCA approval and emergencies …
1.2 Referring to approval by the FCA
…
1.2.2A R …
(2) Paragraph (1) does not apply to statements that explain, in a way that is fair, clear and not misleading, that:
…
(f) the firm’s approved persons approved or notified persons have been approved by, or notified to, the appropriate regulator for the purposes of section 59 of the Act (Approval and notification for particular arrangements); … … 1.2.2B G For the purposes of GEN 1.2.2AR(2)(f), a statement is likely to be misleading if it states or implies that:
(1) a person has been approved by the appropriate regulator; or (2) the fitness and properness of an approved or notified person has been assessed by the appropriate regulator, in relation to a controlled function for which an SMF notification has been made. … 2 Interpreting the Handbook …
2.2 Interpreting the Handbook

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…
Application of provisions where there are commensurate PRA provisions
2.2.23 R (1) This rule applies to Handbook provisions where the PRA have made
commensurate provisions in the PRA Rulebook. It may affect their application by the FCA to PRA authorised persons and PRA approved persons PRA-approved or notified persons. … … The effect of the General Rules
2.2.37 G …
(2) The FCA has decided in certain cases specifically to apply rules to TP firms, for example:
…
(h) in relation to the senior managers and certification conduct rules regime, the main provisions so applied are listed in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) at SYSC 23.3.3G. … … Sch 4 Powers exercised … Sch 4.2 G Powers to make rules The following powers and related provisions in or under the Act have been exercised by the FCA to make the rules in GEN:
Section 59 (Approval and notification for particular arrangements)
Section 60A (Vetting of candidates by authorised persons)
Section 63F (Issuing of certificates)
…

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…
Sch 4.4 G Powers to make codes [deleted] The following powers and related provisions in the Act have been exercised by the FCA to issue the parts of the codes in GEN:
Section 64(2) (Conduct: statements and codes)
Sch 4.5 G Powers to issue statements
The following powers and related provisions in the Act have been exercised by the FCA to issue the parts of the statements in GEN:
…
Section 64 (Conduct: statements and codes)
…
…
Sch 4.7 G Powers to direct, require or specify The following powers and related provisions in the Act have been exercised by the FCA in GEN to direct, require or specify:
…
Section 60 (Applications for approval)
Section 60ZA (Notifications under section 59)
Section 60A (Vetting of candidates by authorised persons)
Section 61 (Determination of applications)
Section 62A (Changes to responsibilities of senior managers)
Section 63ZA (Variation of senior manager’s approval at request of
authorised person)

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Section 63ZB (Variation of senior manager's approval on initiative of
regulator)
Section 63E (Certification of employees by authorised persons)
Section 64C (Requirement for authorised persons to notify regulator of
disciplinary action)
…
…

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Annex H
Amendments to the Fees manual (FEES)
In this Annex, underlining indicates new text and striking through indicates deleted text. 3 Application, Notification and Vetting Fees …
3.2 Obligation to pay fees
…
3.2.7 R Table of application, notification, vetting and other fees payable to the FCA
Part 1A: Application, notification and vetting fees
(1) Fee payer (2) Fee payable (£) by reference to the pricing category in FEES 3
Annex 1AR.
Due date
…
(f) Persons making an application referred to in FEES 3 Annex 15R – Transaction fees:
…
(vi) Applications in respect of controlled functions under the Senior Managers and Certification Conduct Rule Regime (SMCR), including applications by principal firms in respect of SMCR functions in appointed representatives. … … … … 3 Annex 15 FCA Transaction Fees

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3 Annex
15
R
Application type Pricing category in
FEES 3 Annex 1AR or amount of fee (£)
Due date
…
6 Applications other than where the applicant is a credit union,

in respect of controlled functions
under the Senior Managers and
Certification Conduct Rules Regime
(SMCR); or
…
… …
…

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Annex I
Amendments to the Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU) In this Annex, underlining indicates new text and striking through indicates deleted text. 2 Responsibility for insurance distribution and MCD credit intermediation activity …
2.2 Allocation of the responsibility for insurance distribution activity or MCD
credit intermediation activity
Responsibility for insurance distribution activity or MCD credit intermediation activity … 2.2.1A G … (2) The person could, for example, be:
(a) a SMF manager who holds the executive director function (SMF 3) or the other overall responsibility function (SMF 18); or (b) a person who holds a significant management FCA certification function, in relation to, as relevant, insurance distribution business or MCD credit intermediation business. 2.2.1B R (1) The firm must notify the FCA in a timely manner of the allocation in MIPRU 2.2.1R in accordance with (2) or (3). (2) Where the person allocated responsibility under MIPRU 2.2.1R, is:
an SMF manager and the allocation is made at the same time as the firm is required to submit an application for approval or a SMF notification in respect of that SMF manager under SUP 10C, the firm must include details of that allocation in the relevant application or notification. (a) a SMF manager, then notification must be made in the following way:

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(i) in Form A (Application to perform controlled functions) (see SUP 10C Annex 3D ), Form D (Notification: Changes to personal information/application details and conduct breaches/disciplinary action related to conduct) (see SUP 10C Annex 6R) or Form E (Internal transfer of a person performing a controlled function) (see SUP 10C Annex 7D ); and (ii) included in (as relevant):
(A) a statement of responsibilities; or
(B) revised statement of responsibilities sent to the FCA as described in SUP 10C.11.7D (Revised statements of responsibilities:
Procedure); or
(b) a Directory person, the notification is included in the Directory person report (see SUP 16 Annex 47AR (Directory persons report)); or (c) a person other than a person in (a) and (b), then notification may be emailed to ‘firm.queries@fca.org.uk’ or made using a method as set out in SUP 15.7.4R (Method of notification). (3) Where (2) does not apply, the firm must notify the FCA of the allocation by online submission through the FCA’s website or by email to ‘firm.queries@fca.org.uk’ or by a method as set out in SUP 15.7.4R (Method of notification). …

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Annex J
Amendments to the Conduct of Business sourcebook (COBS) In this Annex, underlining indicates new text and striking through indicates deleted text. 18 Specialist Regimes …
18.12 Operating an electronic system in relation to lending
…
Monitoring of the risk management framework
18.12.20 R A firm with a risk management framework must:
…
(5) allocate to an approved person approved or notified person overall responsibility within the firm for the establishment and maintenance of an effective risk management framework and record that allocation. …

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Annex K
Amendments to the Insurance: Conduct of Business sourcebook (ICOBS) In this Annex, underlining indicates new text and striking through indicates deleted text. 8 Claims handling … 8 Annex 1 Employers’ liability register 8 Annex 1 See ICOBS 8.4.4R (1)(a).
Part 1 In relation to information to be included in the employers’ liability register
…
1.1D G (1) To help to demonstrate that it has used its best endeavours, a firm should consider:
(a) appointing an approved person approved or notified person with appropriate seniority within the firm to be responsible for agreeing and signing off the firm’s approach to obtaining employee reference numbers; … … …

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Annex L
Amendments to the Claims Management: Conduct of Business sourcebook (CMCOB) In this Annex, underlining indicates new text. 2 Conduct of business
2.1 General principles
…
Requirements relating to firms with relevant connections to the claim or potential claim …
2.1.18 G (1) For the purposes of CMCOB 2.1.17R to CMCOB 2.1.21R:
…
(b) a person may be responsible for the carrying on of an activity without being approved by or notified to the FCA to perform a designated senior management function as an SMF manager; … … …

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Annex M
Amendments to the Funeral Plan: Conduct of Business sourcebook (FPCOB) In this Annex, underlining indicates new text and striking through indicates deleted text. 17 Application of other parts of the Handbook
17.1 Application and purpose
…
17.1.2 G Application of other parts of the Handbook and of Regulatory Guides
Module Relevant to Funeral Plan Firms
…
Senior Management
Arrangements, Systems and
Controls (SYSC)
SYSC 1, SYSC 4 to SYSC 10, SYSC 18, SYSC 19F.3, SYSC 21, SYSC 22, SYSC 23, SYSC 24, SYSC 27 and SYSC 28A apply to firms carrying out regulated funeral plan activities. Code of Conduct (COCON) This contains rules and guidance that are directly applicable to a firm’s SMF managers, certification employees and other conduct rules staff. It also contains guidance for firms on giving making their staff training aware about the COCON rules that apply to them and general factors to which the FCA will have regard when assessing compliance with the COCON rules. … The Fit and Proper test for Employees and Senior Personnel (FIT) The purpose of FIT is to set out and describe the criteria that a firm should consider when assessing the fitness and propriety of a person:
(1) in respect of whom an application is being made for approval to undertake a controlled function as an FCA-approved or notified SMF manager under the senior managers regime; (1A) in respect of whom the firm is proposing to make an SMF notification to the FCA; or

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(2) who has already been approved; by or notified to the FCA. (3) who is a certification employee; or (4) whom a firm is considering appointing to be a certification employee. It also sets out and describes criteria that the FCA will consider when assessing the fitness and propriety of a candidate for a controlled function position as an FCA-approved or notified SMF manager and that it may consider when assessing the continuing fitness and propriety of approved persons approved or notified persons. …

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Annex N
Amendments to the Pensions Dashboards: Conduct of Business sourcebook (PDCOB) In this Annex, underlining indicates new text and striking through indicates deleted text. 17 Application of other parts of the Handbook
17.1 Application of other parts of the Handbook
…
17.1.2 G The application of other parts of the Handbook and of Regulatory Guides is
set out in the following table.
Module Relevant to firms carrying out regulated pensions dashboard activity … Senior Management Arrangements, Systems and Controls sourcebook (SYSC) SYSC 1, SYSC 4 to SYSC 10, SYSC 18, and SYSC 21 to SYSC 24 and SYSC 27 apply to firms carrying out regulated pensions dashboard activity. Insurers carrying out regulated pensions dashboard activity will be subject to the provisions of SYSC applicable to insurers when carrying out that activity. Code of Conduct sourcebook (COCON) This contains rules and guidance that are directly applicable to a firm’s SMF managers, certification employees and other conduct rules staff. It also contains guidance for firms on giving making their staff training aware about the COCON rules that apply to them and general factors to which the FCA will have regard when assessing compliance with the COCON rules. … … Fit and Proper test for Employees and Senior Personnel sourcebook (FIT) The purpose of FIT is to set out and describe the criteria that a firm should consider when assessing the fitness and propriety of a person:
(1) in respect of whom an application is being made for approval to undertake a

FCA 202X/YY controlled function as an FCA-approved or notified SMF manager under the senior managers regime; (1A) in respect of whom the firm is proposing to make an SMF notification to the FCA; or (2) who has already been approved; by or notified to the FCA. (3) who is a certification employee; or (4) whom a firm is considering appointing to be a certification employee. FIT also sets out and describes criteria that the FCA will consider when assessing the fitness and propriety of a candidate for a controlled function position as an FCA-approved or notified SMF manager and that it may consider when assessing the continuing fitness and propriety of approved persons approved or notified persons. …

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Annex O
Amendments to the Client Assets sourcebook (CASS) In this Annex, underlining indicates new text and striking through indicates deleted text. 1A CASS firm classification and operational oversight … 1A.3 Responsibility for CASS operational oversight … 1A.3.1-A G The material in CASS 1A.3.1BG about how CASS 1A.3 fits into the FCA senior managers and certification conduct rules regime for SMCR firms also applies to a CASS small firm that is an SMCR firm and the function in CASS 1A.3.1R. The senior managers regime and the certification conduct rules regime … 1A.3.1B G (1) (a) This paragraph CASS 1A.3.1BG describes how CASS 1A.3.1AR applies to SMCR firms. (b) The function in CASS 1A.3.1AR is not a separate controlled function and performing that function does not require approval or notification as an approved person approved or notified person. … (1A) There are three elements The element of the regime for SMCR firms that are is particularly relevant to CASS 1A, although they do it does not all apply to all SMCR firms:, is (a) a firm’s obligation to allocate certain responsibilities to its SMF managers (see SYSC 24 (Senior managers and certification conduct rules regime: Allocation of prescribed responsibilities));. (b) a firm’s obligation to ensure that one or more of its SMF managers have overall responsibility for each of its activities, business areas and management functions (see

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SYSC 26 (Senior managers and certification conduct rules regime: Overall and local responsibility)); and (c) the certification regime (the certification regime is explained in SYSC 27 (Senior managers and certification regime:
Certification regime) and SYSC TP 7 (Bank of England and Financial Services Act 2016: Certification and regulatory references) explains that the certification regime comes into force sometime after other parts of the senior managers and certification regime). (2) (a) This paragraph (2) explains how CASS 1A.3.1AR applies to an SMCR firm to which SYSC 24 and SYSC 26 both apply applies. … (d) The firm may allocate the CASS FCA-prescribed senior management responsibility described in (b) to an SMF manager who does not perform any other function coming within the FCA regime for SMF managers in SMCR firms. See SUP 10C.7 (Other overall responsibility function (SMF18)) and SUP 10C.8.1R (Other local responsibility function (SMF22)) for details. Where this is the case, the manager will be performing the other overall responsibility function or the other local responsibility function. [deleted] (e) The firm may choose to allocate the function in CASS 1A.3.1AR to someone who is not an approved person approved or notified person and SMF manager. If so:, (i) that person will be subject to the employee certification regime described in SYSC 27 (Senior managers and certification regime: (Certification Regime); (ii) that person will be subject to supervision by the SMF manager in (b); and. (iii) the function in CASS 1A.3.1AR will be the CASS oversight FCA certification function in SYSC 27.8.1R. (3) In relation to an SMCR firm to which SYSC 24 applies but SYSC 26 does not apply, the guidance in sub-paragraphs (2)(b), (2)(c), and

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2(e) applies, but the guidance in sub-paragraph (2)(d) does not apply. [deleted] (4) (a) The position of an SMCR firm to which neither SYSC 24 nor SYSC 26 does not apply is slightly different. … (d) Where (c) applies, the person performing the function in CASS 1A.3.1AR will fall into the certification regime. The function in CASS 1A.3.1AR will be the CASS oversight FCA certification function in SYSC 27.8.1R there is no specific requirement under the senior managers and conduct rules regime to allocate responsibility for supervising that person to a specific SMF manager. … 11 Debt management client money chapter …
11.3 Responsibility for CASS operational oversight
CASS small debt management firm other than a not-for-profit debt advice body … 11.3.1A G CASS 11.3.3G(5) to (11) also apply to a CASS small debt management firm that is an SMCR firm and the function in CASS 11.3.1R. However:
(1) the function in CASS 11.3.1R is not a separate FCA certification function; and (2) the person performing that function will not necessarily be subject to the employee certification regime described in SYSC 27 (Senior managers and certification regime: Certification regime). CASS small debt management firm that is a not-for-profit debt advice body … 11.3.2A G (1) CASS 11.3.3G(5) to (11) do not apply to a CASS small debt management firm that is a not-for-profit debt advice body. This is because neither SYSC 24 (Senior managers and certification conduct rules regime: Allocation of prescribed responsibilities) nor SYSC 26

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(Senior managers and certification regime: Overall and local responsibility) does not apply to it. … (3) The function in CASS 11.3.2R is not a separate FCA certification function and the person performing that function will not necessarily be subject to the employee certification regime described in SYSC 27 (Senior managers and certification regime:
Certification Regime). [deleted]
CASS large debt management firms
11.3.3 G …
(4A) For an SMCR firm, the function in CASS 11.3.4R is not a separate controlled function and performing that function does not require approval or notification as an approved person approved or notified person. Paragraphs (5) to (11) describe how CASS 11.3.4R applies to such firms. (4B) There are three elements The element of the regime for SMCR firms that are is particularly relevant to CASS 11.3, although they do it does not all apply to all SMCR firms:, is (a) a firm’s obligation to allocate certain responsibilities to its SMF managers (see SYSC 24 (Senior managers and certification conduct rules regime: Allocation of prescribed responsibilities));. (b) a firm’s obligation to ensure that one or more of its SMF managers have overall responsibility for each of its activities, business areas and management functions (see SYSC 26 (Senior managers and certification regime: Overall and local responsibility)); and (c) the certification regime (the certification regime is explained in SYSC 27 (Senior managers and certification regime:
Certification regime) and SYSC TP 7 (Bank of England and Financial Services Act 2016: Certification and regulatory references) explains that the certification regime comes into force sometime after other parts of the senior managers and certification regime). (5) Paragraphs (6) to (9) explain how CASS 11.3.4R applies to an SMCR firm to which SYSC 24 and SYSC 26 apply. [deleted]

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…
(8) The SMCR firm may allocate the CASS FCA-prescribed senior management responsibility described in (6) to an SMF manager who does not perform any other function coming within the FCA regime for SMF managers in SMCR firms. See SUP 10C.7 (Other overall responsibility function (SMF18)) and SUP 10C.8.1R (Other local responsibility function (SMF22)) for details. [deleted] (9) The SMCR firm may choose to allocate the function in CASS 11.3.4R to someone who is not an approved person approved or notified person and SMF manager. If so:, (a) that person will be subject to the employee certification regime described in SYSC 27 (Senior managers and certification regime: Certification regime); (b) that person will be subject to supervision by the SMF manager in (6); and. (c) the function in CASS 11.3.4R will be the CASS oversight FCA certification function in SYSC 27.8.1R. (10) In relation to an SMCR firm to which SYSC 24 applies but SYSC 26 does not apply the guidance in paragraphs (6), (7) and (9) applies, but the guidance in paragraph (8) does not apply. [deleted] (11) (a) The position of an SMCR firm to which neither SYSC 24 nor SYSC 26 does not apply is slightly different. … (d) Where (c) applies, the person performing the function in CASS 11.3.4R will fall into the certification regime. The function in CASS 1A.3.1AR will be the CASS oversight FCA certification function in SYSC 27.8.1R there is no specific requirement under the senior managers and conduct rules regime to allocate responsibility for supervising that person to a specific SMF manager. … … 13 Claims management: client money

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…
13.2 Organisational requirements and responsibility for CASS operational
oversight
…
13.2.5 G (1) This paragraph CASS 13.2.5G explains how CASS 13.2.3R fits into
the senior managers and certification conduct rules regime. This paragraph does not deal with a firm that is a PRA-authorised person. (2) The senior managers and certification conduct rules regime is summarised in SYSC 23.3 (Overview of the senior managers and certification conduct rules regime). (3) The function in CASS 13.2.3R is not a separate controlled function and performing that function does not require approval or notification as an approved person approved or notified person. (4) There are three elements The element of the senior managers and certification conduct rules regime that are is particularly relevant to CASS 13.2.3R, although they do it does not all apply to all SMCR firms:, is (a) a firm’s obligation to allocate certain responsibilities to its SMF managers (see SYSC 24 (Senior managers and certification conduct rules regime: Allocation of prescribed responsibilities));. (b) a firm’s obligation to ensure that one or more of its SMF managers have overall responsibility for each of its activities, business areas and management functions (see SYSC 26 (Senior managers and certification regime: Overall and local responsibility)); and (c) the certification regime (the certification regime is explained in SYSC 27 (Senior managers and certification regime:
Certification regime) and SYSC TP 7 (Bank of England and Financial Services Act 2016: Certification and regulatory references) explains that the certification regime comes into force sometime after other parts of the senior managers and certification regime). (5) …

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(b) Neither SYSC 24 nor SYSC 26 applies does not apply to a limited scope SMCR firm. … (e) Where (d) applies, the person performing the function in CASS 13.2.3R will fall into the certification regime. The function in CASS 13.2.3R will be the CASS oversight FCA certification function in SYSC 27.8.1R there is no specific requirement under the senior managers and conduct rules regime to allocate responsibility for supervising that person to a specific SMF manager. (6) (a) This paragraph (6) explains how CASS 13.2.3R applies to a core SMCR firm or an enhanced scope SMCR firm. (b) SYSC 24 applies to a core SMCR firm and an enhanced scope SMCR firm but SYSC 26 does not. … (e) The firm may choose to allocate the function in CASS 13.2.3R to someone who is not an SMF manager. If so:, (i) that person will be subject to the certification regime described in SYSC 27 (Senior managers and certification regime: Certification regime); (ii) that person will be subject to supervision by the SMF manager in (c); and. (iii) the function in CASS 13.2.3R will be the CASS oversight FCA certification function in SYSC 27.8.1R. (7) [deleted] (a) This paragraph (7) explains how CASS 13.2.3R applies to an enhanced scope SMCR firm. (b) Both SYSC 24 and SYSC 26 apply to an enhanced scope SMCR firm. (c) CASS 13.2.5G(6) applies to an enhanced scope SMCR firm.

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(d) In addition, the firm may allocate the CASS FCA-prescribed senior management responsibility to an SMF manager who does not perform any other function coming within the FCA regime for SMF managers in SMCR firms. See SUP 10C0.7 (Other overall responsibility function (SMF18)) and SUP 10C.8.1R (Other local responsibility function (SMF22)) for details. Where this is the case, the manager will be performing the other overall responsibility function or the other local responsibility function. …

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Annex P
Amendments to the Supervision manual (SUP) In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated.
Part 1: Comes into force on [date 1]
2 Information gathering by the FCA or PRA on its own initiative …
2.4 ‘Mystery shopping’
…
2.4.5 G The FCA may use the information it obtains from mystery shopping in
support of both its supervisory functions and its enforcement functions. This includes sharing any information so obtained with firms and approved persons approved or notified persons. … 4 Actuaries …
4.2 Purpose
…
4.2.3 G The functions described by SUP 4.2.2G(1) are performed by one or more
actuaries who are required to hold office continuously and must be approved persons approved or notified persons. Solvency II firms are required to have an actuarial function. Solvency II firms are not required to appoint an external actuary to fulfil the actuarial function for the purposes of rule 6 of the PRA Rulebook: Solvency II firms: Conditions Governing Business, but they must do so if they do not have the internal capability (see PRA Rulebook: Solvency II Firms: Actuaries). Whoever has responsibility for the actuarial function (whether internal or external) will need to be approved by or notified to the PRA as a Chief Actuary. Solvency II firms carrying on with-profits business are required to appoint a qualified with-profits actuary (whether internal or external). Whoever has responsibility for advising the governing body of the firm on the exercise of discretion affecting the firm's with-profits business will need to be approved by or notified to the PRA as a With-Profits Actuary. The principal

FCA 202X/YY duty of an actuary appointed to perform these functions is to advise the firm (see SUP 4.3.13 R to SUP 4.3.18 G for the rights and duties of such an actuary). … 6 Applications to vary and cancel Part 4A permission and to impose, vary or cancel requirements …
6.3 Applications for variation of permission and/or imposition, variation or
cancellation of requirements
…
How a variation of permission may affect the firm’s approved or notified persons
6.3.8 G (1) Where a firm is submitting an application for variation of Part 4A
permission which would lead to a change in the controlled functions of its approved persons approved or notified persons, it should, at the same time and as appropriate:
(a) make an application for an internal transfer of an approved person, Form E (Internal transfer of a person performing a controlled function), or make an application for an individual to perform additional controlled functions, the relevant Form A (Application to perform senior management functions); see: approval or a SMF notification for the individual to perform the relevant controlled functions; or (i) SUP 10A.13.3D to SUP 10A.13.5G (for a firm that has appointed representatives); (ii) SUP 10C.10 (for an SMCR firm); or (iii) the corresponding PRA requirements; (b) notify the FCA or PRA of any approved person approved or notified person who has ceased to perform a controlled function specified by that regulator, Form C (Notice of ceasing to perform controlled functions (including senior management functions)); see:. (i) SUP 10A.14 (for a firm that has appointed representatives); (ii) SUP 10C.14 (for an SMCR firm); or

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(iii) the corresponding PRA requirements.
(2) If the firm intends to recruit new individuals to perform controlled functions, it should apply for approval of the individuals as approved persons as soon as possible using Form A (Application to perform senior management functions); see: [deleted] (a) SUP 10A.13 (for a firm that has appointed representatives); (b) SUP 10C.10 (for an SMCR firm); or (c) the corresponding PRA requirements. SMCR firm status
6.3.9 G A variation of a firm’s Part 4A permission may mean that it becomes an
SMCR firm or that it changes from one type of SMCR firm to another. This would have a number of significant consequences, which include:
(1) the application of the special powers in relation to misconduct by approved persons approved or notified persons (see DEPP 6.2.9- AG); … (4) the other elements of the regime for SMCR firms described in SYSC
23.4 23.3 (Overview of the senior managers and certification
conduct rules regime) apply (which differ depending on the type of SMCR firm). … … Information which may be required. See SUP 6.3.24 G
6.3.25 G
Type of business Information which may be required All … …
3. Organisation charts and details of individuals
transferring or being recruited to perform new controlled functions (see SUP 10A and SUP

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10C, and the corresponding PRA requirements for details of the application or transfer procedures under the approved persons approved or notified persons or senior managers regime). … …
6.4 Applications for cancellation of permission
…
Approved or notified persons
6.4.18 G (1) A firm which is applying for cancellation of Part 4A permission and
which is not otherwise authorised by, or under, the Act should, at the same time:
…
(b) notify the the FCA or PRA of persons ceasing to perform controlled functions specified by that regulator. (2) These forms notifications should give the effective date of withdrawal, if known (see SUP 10A and SUP 10C (FCA’s regimes for approved persons approved or notified persons)). … 6B Variation and cancellation of permission and imposition of requirements on the FCA’s own initiative and intervention against incoming firms … 6B.8 Supervisory notices varying a firm’s Part 4A permission, imposing a requirement or varying an approval on the FCA’s own initiative (see DEPP
8) and supervisory notices imposing a direction under regulation 74C of the
Money Laundering Regulations on the FCA’s own initiative (see ENFG App 2.2) 6B.8.1 G It is important that the FCA maintains an accurate public record. One of the ways the FCA does this is by publishing the reasons for variations of Part 4A permission, the imposition of requirements, variations of the approval or notification of SMF managers and the imposition and variation of directions under regulation 74C(5) of the Money Laundering Regulations.

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The FCA will always aim to balance the interests of consumers and the possibility of unfairness to the person subject to the FCA’s action. The FCA will publish relevant details of fundamental and non-fundamental variations of Part 4A permission and requirements which it imposes on firms, variations of approval or notification of SMF managers and directions under regulation 74C(5) of the Money Laundering Regulations. But it will use its discretion not to do so if it considers this to be unfair to the person on whom the variation or direction is imposed, prejudicial to the interests of consumers, or detrimental to the stability of the UK financial system. Publication will generally include placing the notice on the FCA website and this may be accompanied by a press release. As with warning notice statements, decision notices and final notices, supervisory notices and related press releases that are published on the FCA’s website will be reviewed upon request. The FCA will determine at that time whether continued publication is appropriate, or whether notices and related press releases should be removed or amended. The FCA expects usually to conclude that supervisory notices and related press releases that have been published for less than 6 years should not be removed from the website. 6B.8.2 G The FCA will amend the Financial Services Register to reflect a firm’s actual Part 4A permission, the terms of an SMF manager’s actual approval or notification under section 59 of the Act following any variation or the terms of a direction imposed under regulation 74C of the Money Laundering Regulations. … 10C FCA senior managers regime for approved and notified persons in SMCR firms 10C.1 Application General … 10C.1.2 G This chapter is also relevant to FCA-approved SMF managers FCAapproved or notified SMF managers of an SMCR firm. … Overseas firms: general 10C.1.5 A G (1) Generally, where an overseas manager of an overseas SMCR firm has responsibilities in relation to its branch in the United Kingdom that are strategic only, they will not need to be an FCA-approved SMF manager FCA-approved or notified SMF manager.

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…
…
10C.2 Purpose
10C.2.1 G The purpose of SUP 10C is:
(1) to specify, under section 59 of the Act, descriptions of the FCAdesignated senior management functions for SMCR firms, which are listed in SUP 10C.4.3R; and (2) to specify give some details about the manner in which a firm must apply for the FCA’s approval under section 59 of the Act and other procedures for FCA-approved SMF managers; (3) to specify those FCA-designated senior management functions to which the SMF notification procedure applies and to give some details about that process; (4) to explain that a firm should apply for the FCA’s approval under
section 59 of the Act for the performance of any FCA-designated
senior management function not subject to the SMF notification procedure; (5) to describe the processes for varying approvals for and notifications of the performance of designated senior management functions and making them subject to conditions and limitations; and (6) describing various other procedures for FCA-approved or notified SMF managers. … 10C.2.3 G (1) The FCA has certain powers in relation to PRA-approved persons the exercise by the PRA of its powers in relation to PRA-approved or notified persons, such as the requirement for FCA consent to the PRA granting approval for the performance of a PRA controlled function. SUP 10C does not deal with these. … … 10C.3 General material about the definition of controlled functions …

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Definition of FCA controlled function: arrangements 10C.3.6 R In accordance with section 59 of the Act (Approval and notification for particular arrangements), a function specified in this chapter is an FCA controlled function only to the extent that it is performed under an arrangement entered into by:
…
10C.3.7 G Section 59(1) and (2) of the Act provide that approval by or notification to the FCA is necessary for an FCA controlled function which is performed under an arrangement entered into by a firm, or its contractor (typically an appointed representative), in relation to a regulated activity. … 10C.3A The 12-week 18-week rule Purpose 10C.3A. 1 G This section enables cover to be given for temporary absences and reasonably unforeseen permanent departures. It applies whether the absence is foreseen or unexpected, subject to SUP 10C.3A.15R (Reasonable use of the rules). 10C.3A. 2 G If an SMF manager permanently and unexpectedly leaves a firm, the purpose of this section is to allow the firm to replace them temporarily, without needing to get approval for the temporary replacement, while the firm applies to the FCA for approval, or makes an SMF notification, for or of someone to act as a permanent replacement. The temporary replacement can stay in place:
(1) for up to 12 18 weeks; or
(2) up to the time when the FCA determines the application for the approval of the permanent replacement or, as the case may, when the SMF notification of the permanent replacement becomes effective, as long as that application or SMF notification is made within the first 12 18 weeks following departure. 10C.3A. 3 G If an SMF manager permanently and unexpectedly leaves a firm, the firm may want to replace them for an interim period with another person and seek approval from the FCA or, as the case may be, make an SMF notification, for or of that interim appointee while the firm looks for a longterm replacement. This section allows the firm to appoint a temporary replacement in the ways described in SUP 10C.3A.2G without the need for

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FCA approval or notification while it is seeking approval for the interim replacement or until that SMF notification becomes effective. 10C.3A. 4 G If an SMF manager is temporarily absent, the purpose of this section is to allow the firm to replace them temporarily without needing to get approval or, as the case may be, making an SMF notification, for or of the replacement. The replacement can be in place for up to 12 18 weeks. In many cases, that is all that the firm will need. However, that period can be extended to cover unexpected longer absences in the same way as for permanent departures. 10C.3A. 5 G See SUP 10C.12.7G to SUP 10C.12.14G (time-limited approvals) for procedures for temporary appointments longer than the period permitted by this section. The 12-week 18-week rule: The main rules 10C.3A. 6 R If:
(1) a firm appoints an individual (I) who is a member of the conduct rules staff of the firm to perform a function which, but for this rule, would be an FCA-designated senior management function; (2) the appointment is to provide cover for an SMF manager who is an individual; and whose absence is:
(a) temporary; or
(b) reasonably unforeseen; and
(3) the appointment is for less than 12 18 weeks in a consecutive 12- month period (subject to SUP 10C.3A.8R); the description of the relevant FCA-designated senior management function does not relate to those activities of that individual. … 10C.3A. 8 R (1) This rule deals with an appointment by a firm under SUP 10C.3A.6R where: [deleted] (a) the absence is reasonably unforeseen; or (b) an absence of over 12 weeks is reasonably unforeseen. (2) If, before the period under SUP 10C.3A.6R(3) would have expired but for this rule, the firm makes a valid and complete application for

FCA 202X/YY the approval or, as the case may, makes a valid and complete SMF notification, for or of the performance by a person of the FCAdesignated senior management function that was performed by the absent manager:
(a) the period for which the function performed by the temporary replacement is not an FCA-designated senior management function is extended until:
(i) that application is finally determined; or, as the case may be, (ii) the SMF notification becomes fully effective or is withdrawn; and (b) the period for which the temporary replacement may perform the function without approval is extended accordingly. … (4) … (5) References to granting an application include, in the case of a permitted conditional SMF application, granting it subject only to conditions, or for a limited period, requested in the application (or both) in accordance with section 61(3ZA) of the Act (Determination of applications). 10C.3A. 9 G The reference in SUP 10C.3A.8R(3) to ‘not granted’ includes a situation where the FCA has granted an application subject to conditions or for a limited period (or both), subject to SUP 10C.3A.8R(5). … Examples of when the rule can be used … 10C.3A. 12 G Table: Examples of the operation of the 12-week 18-week rule Firm can use the rule Firm may not use the rule or the rule is subject to restricted use (1) S gives long notice in accordance with S’s contract of (1) S and F agree a retirement plan for S a year before S leaves, including the

FCA 202X/YY employment. F did not foresee this. Immediately after S gives the notice, S stops performing their designated senior management function. Instead, S stays on as a consultant to help with the handover. S leaves F altogether when the notice expires. F knows that S will leave F a long time in advance before S leaves. However, for the purposes of the rule, S’s absence begins when S stops performing the designated senior management function. F had very little notice of the absence on this basis, and so it is reasonable under SUP 10C.3A.15R to use the rule. retirement date. S, in accordance with the retirement plan, gives short notice of retirement and leaves when the notice expires. A key feature of whether the use of the rule is reasonable as referred to in SUP 10C.3A.15R is whether it would be reasonable to expect F to have contingency plans in place for S’s departure that enable F to get a replacement approved before S leaves. Factors include how much notice F has of S’s likely departure. Therefore, in this case F should not use the rule. (2) S takes parental leave with only short notice. … However, a firm should try to avoid the need to use the rule or minimise use of the rule (see SUP 10C.3A.15G SUP 10C.3A.15R). In the case of long-term leave, a firm should have systems in place to deal with parental leave that will enable it to identify a replacement to fill in for S during S’s absence at once and apply for their approval in sufficient time for the replacement to have been approved by the FCA by the time S goes on leave. … … (3) S gives long notice that S is going to take extended leave of 1 year. After S goes on leave, S resigns by giving the notice required by S’s contract of

FCA 202X/YY employment. F does not foresee the resignation. F may not treat the absence as unexpected for the purpose of SUP 10C.3A.8R after S resigns as F foresaw an absence exceeding 12 weeks. SUP 10C.3A.8R applies if F did not foresee any absence or only foresaw an absence of under 12 weeks. In addition, although the resignation is treated as unexpected permanent absence for the purpose of SUP 10C.3A.6R, F should not use the fixed 12-week period in SUP 10C.3A.6R(3) rule as F should have put someone in place to cover S’s expected long-term temporary absence immediately after S goes on leave. (4) S gives long notice that S is going to take a short career break. Shortly after S goes on leave, S resigns by giving the notice required by S’s contract of employment. F does not foresee the resignation. F may treat the absence as unexpected for the purpose of SUP 10C.3A.6R and SUP 10C.3A.8R once S resigns. F foresaw a short absence (under 12 weeks) but not a permanent absence. It may be reasonable for F to use the rule as referred to in SUP 10C.3A.15R if F considered that it would be unreasonable for it to have the temporary replacement approved because of the shortness of the expected absence. Even if F did line up a temporary replacement, F may consider that the temporary replacement was suitable to fill in for a short absence but not for a long one or …

FCA 202X/YY that the temporary replacement is not available for the extended period. (5) S leaves F. F appoints R to fill in for S until a permanent replacement is approved. F makes an application to the FCA 5 6 weeks after R is appointed. However, F withdraws the application for approval of the candidate 2 6 weeks later. Two weeks after that, F makes an application for the approval of someone else. The FCA grants its approval 8 weeks later. That means that R performs the function for l7 22 weeks. F would not be able to use the extended period in SUP 10C.3A.8R if the second application was made more than 12 18 weeks after R is appointed. (5) S takes extended leave. F expects this. F appoints R1 to fill in for S. After 10 weeks, F wishes to replace R1 with R2. F can use the rule for R2 as well as for R1. However, F can only appoint R2 for 2 8 weeks under the rule. If F has sufficient warning, it should find a replacement for S before S leaves and should not use the rule. (6) S1 leaves F. R acts as a temporary replacement for 10 weeks. Shortly afterwards, S2 is absent and R acts as a temporary replacement for 11 weeks. This is permissible because the 18- week limit is calculated by reference to the absent SMF manager, not the temporary replacement. (7) S is temporarily absent from F for 8 weeks. Later in the same year, S leaves F permanently. R may act as a temporary replacement in respect of the second absence for 10 weeks. This 10-week period may be

FCA 202X/YY extended as long as F makes an application or notification as referred to in SUP 10C.3A.8R within that remaining 10-week period. In this table:
‘S’ (and S1 and S2) refers to the absent SMF manager referred to in SUP 10C.3A.6R; ‘F’ refers to the firm in question; and ‘R’ (and R1 and R2) refers to the individual providing cover referred to in SUP 10C.3A.6R. In order to simplify the drafting of the table, it is assumed that the SMF notification procedure does not apply to the functions in question. Fit and proper … 10C.3A.1 4 G … (3) A firm should ensure that the replacement has the skills, personal characteristics, knowledge and expertise necessary for the discharge of the responsibilities allocated to them under SUP 10C.3A.6R, including any FCA-prescribed senior management responsibilities or any responsibilities under SYSC 26 (Senior managers and certification conduct rules regime: Overall and local responsibility) re-allocated from the absent manager. Reasonable use of the rules 10C.3A.1 5 G R A firm should must:
(1) use SUP 10C.3A.6R and SUP 10C.3A.8R reasonably; and (2) not limit its use of those rules unless it needs to, even if the firm is otherwise entitled to use them; to the extent reasonably practicable. (3) use those rules as infrequently as reasonably possible; and [deleted]

FCA 202X/YY
(4) limit the time a substitute is in place under the rules to as short a time as reasonably possible. [deleted] 10C.3A.1 5A G A firm should:
(1) not use SUP 10C.3A.6R and SUP 10C.3A.8R unless it needs to, even if the firm is otherwise entitled to use them; (2) use those rules as infrequently as reasonably possible; and (3) limit the time a substitute is in place under the rules to as short a time as reasonably possible. 10C.3A.1 6 G The steps that a firm should take to achieve the things in SUP 10C.3A.15G SUP 10C.3A.15R and SUP 10C.3A.15AG include:
(1) having in place and operating effective and up-to-date succession plans for each of its SMF managers; (2) using notice periods effectively to identify candidates to fill the place of the departing SMF manager and to apply for approval for, or give an SMCR notification of, the replacement quickly; (3) submitting an application for the approval or notification of the individual who is to fill the place of the absent or departing SMF manager as soon as reasonably possible; and (4) ensuring that the application in (3) is of good quality and, in particular, ensuring that the FCA does not have to ask for explanations of the material submitted under the application or to request further information. 10C.3A.1 7 G A firm could also take the following steps to achieve the things in SUP 10C.3A.15G SUP 10C.3A.15R and SUP 10C.3A.15AG:
…
Notification of absence
10C.3A.1
8
G (1) A firm may be required to notify the FCA of the absence of an SMF manager using a Form C or D under SUP 10C.14 (Changes to an FCA-approved or notified person’s details) but it is not otherwise required routinely to report the use of SUP 10C.3A.6R or SUP 10C.3A.8R (The 12-week 18-week rule: The main rules). …

FCA 202X/YY
Re-allocation of overall and local responsibilities 10C.3A.1 9 G (1) A firm to which SYSC 26 (Senior managers and certification conduct rules regime: Overall and local responsibility) applies may have allocated responsibilities under that chapter to an SMF manager who is absent under SUP 10C.3A.6R or SUP 10C.3A.8R (The 12- week 18-week rule: The main rules). (2) SYSC 26.4.6R (Exclusion where the 12-week 18-week rule applies) deals with how those responsibilities may be reallocated during the SMF manager’s absence. (3) SYSC 26.4.8G explains that SYSC 26.4.6R, SUP 10C.3A.6R and SUP 10C.3A.8R apply to a person performing the other overall responsibility function or the other local responsibility function as well as to other designated senior management functions. [deleted] Re-allocation of prescribed responsibilities 10C.3A.2 0 G … Recording the arrangements for absences 10C.3A.2 1 G If the responsibilities of an absent SMF manager are re-allocated during their absence, it should be clear (and the firm’s records should show) who has those responsibilities, even if the re-allocation is temporary. 10C.4 Specification of functions 10C.4.1 R … (2) In accordance with section 59(6A) of the Act (Approval and notification for particular arrangements), the FCA designates each function in (1) as a senior management function. 10C.4.2 R SUP 10C Annex 1 (What functions apply to what type of firm) sets out:
(1) which of the functions in SUP 10C.4.3R apply to which kind of firm.; and (2) which of the functions in SUP 10C.4.3R are subject to the SMF notification procedure. 10C.4.3 R Table of FCA-designated senior management functions for SMCR firms

FCA 202X/YY
Type SMF Description of FCA controlled function … FCA required functions … SMF 18 Other overall responsibility function SMF22 Other local responsibility function … … … 10C.4A FCA governing functions: General PRA-authorised persons 10C.4A. 1 G SUP 10C.9 (Minimising overlap with the PRA approved or notified persons regime) explains that in many cases a person performing one of the functions set out in SUP 10C.5 or SUP 10C.5A for a PRA-authorised person will not in fact require approval from or notification to the FCA to perform the function and will just require PRA approval or notification. Sole traders 10C.4A. 2 G (1) An individual sole trader themselves will not need approval or to be notified to perform any of the FCA governing functions. Therefore the FCA governing functions do not apply to a sole trader with no employees. … 10C.5 FCA governing functions: Executive … Executive director function: Adjustment of definition for non-directive friendly societies … 10C.5.10 G …

FCA 202X/YY
(3) The individual in (2) may, for example, have the title of chief executive or similar. The individual would (subject to SUP 10C.5.11G) have to be an FCA-approved person FCA-approved or notified person under SUP 10C.5.9R. … Partner function: When partners and members do not require approval … 10C.5.20 G … (2) A partner whose only regulated activities are incidental to their professional services, in a firm whose principal purpose is to carry on other than regulated activities, need not be an FCA-approved person FCA-approved or notified person. … … 10C.5A FCA governing functions: Oversight Non-executive directors 10C.5A. 1 G (1) As explained in SUP 10C.7.4G, the FCA does not expect a nonexecutive director ever to perform the other overall responsibility function. (2) Therefore, a A non-executive director will not need to be approved or notified to perform any FCA-designated senior management function unless they perform one of the FCA-designated senior management functions set out in this section. … 10C.5B FCA governing functions: Group entities Group entity senior manager function (SMF7) 10C.5B. 1 R … (3) … (4) This controlled function only applies if the person in (3) has the function of:

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(a) having responsibility for the conduct of the whole of the business of the firm, its group or a part of that group that contains the firm; (b) having responsibility for management of the financial resources of, and of the financial affairs of, the firm, its group or a part of that group that contains the firm; (c) having responsibility for overall management of the risk controls of, and of the risk management arrangements of, the firm, its group or a part of that group that contains the firm; (d) having responsibility for the internal operations and technology of the firm, its group or a part of that group that contains the firm; (e) having responsibility for chairing, and overseeing the performance of the role of, the governing body of a parent undertaking or holding company of the firm; (f) having responsibility for the overall management of the compliance requirements for SMCR firms for the firm, its group or a part of that group that contains the firm; or (g) having responsibility for overall management of the functions described in the definition of money laundering reporting officer for the firm, its group or a part of that group that contains the firm. 10C.5B. 1A G … Guidance on aspects of the definition 10C.5B. 1B G The guidance in SUP 10C.6B (Systems and controls functions: Other) on the meaning of internal operations and technology is also relevant to the meaning of those terms as used in SUP 10C.5B.1R(4)(d). 10C.5B. 1C G A person who has joint responsibility for any of the functions referred to in SUP 10C.5B.1R(4) can fall within SUP 10C.5B.1R(4). A person (P) has joint responsibility for a function with another if P has responsibility for the whole function, such as in a job share. It does not include a case where the function is divided between them. 10C.5B. 1D G SUP 10C.5B.1R(4) refers to a part of a group that contains the firm. That phrase is not limited to a sub-group containing the firm headed by the firm or another member of the group. A firm and another member of the group

FCA 202X/YY can be in the same part of the group even if the only connection between them is membership of that group. … When the group entity senior manager function applies … 10C.5B. 6 G (1) SUP 10C.5B.1R(2) means that an individual who is approved to perform another designated senior management function for a firm (or whose performance of another designated senior management function for the firm has been notified) will often not need to be approved to perform the group entity senior manager function for that firm as well. … (3) Similarly an individual who is approved to perform another designated senior management function for the firm (or whose performance of another designated senior management function for the firm has been notified) may have influence that comes from holding that post in matters falling outside the core duties of that post. For example, a chief finance officer of a firm will have important input into decisions that fall outside the core financial control function. That influence does not mean that they are performing the group entity senior manager function. … 10C.5B. 9 G … (2) This does not mean that it is limited to having direct influence on the conduct of regulated activities. It simply reflects the link that
section 59 of the Act (Approval and notification for particular
arrangements) requires between a senior management function and regulated activities. It emphasises the point made by SUP 10C.3.6R (Definition of FCA controlled function: arrangements). … 10C.5B. 10 G Thus, for example, the influence of a person performing the group entity senior manager function may relate to the firm’s:
(1) financial resources (so that the firm’s group’s chief financial officer may be within the scope of the function); or

FCA 202X/YY
(2) technology (so that the firm’s group’s chief information and technology officer may be within the scope of the function); or. (3) human resources (so that the firm’s group’s head of human resources may be within the scope of the function). [deleted] … 10C.6B Systems and controls functions: Other … The chief operations function (SMF24) … 10C.6B. 8 G Table: Examples of how the chief operations function applies Example Comments … (4) Firm A splits overall responsibility for its internal operations between various individuals. A separate individual is responsible for human resources, business continuity, procurement and outsourcing, buildings and the remaining parts of internal operations. Firm A also has a Chief Information & Technology Officer (CITO) with responsibility for all the firm’s technology. Each individual is equally senior. The CITO performs the chief operations function. None of the others perform the chief operations function. This is because none of them has responsibility for the firm’s internal operations as a whole or for all the internal operations of a part of the business. Firm A has divided the responsibility based on function rather than business line. However those others may be performing the other overall responsibility function. … SUP 10C.7 (Other overall responsibility function (SMF18)) and SUP 10C.8 (The other local responsibility function (SMF22)) are deleted. The deleted text is not shown but the sections are marked ‘[deleted]’ as shown below.

FCA 202X/YY
10C.7 Other overall responsibility function (SMF18) [deleted] 10C.8 The other local responsibility function (SMF22) [deleted] Amend the following as shown. 10C.8A EEA branch senior manager function (SMF21) … 10C.8A. 3 G (1) The definition of the EEA branch senior manager function (SMF21) is similar to that of the significant management FCA certification function under SYSC 27.8.4R. However, only the former is an FCAdesignated senior management function. [deleted] (2) The main differences are:
(a) SUP 10C.8A.2R(2) is not included in the significant management FCA certification function; and (b) the overriding requirements in SUP 10C.3 (General material about the definition of controlled functions) do not apply to the significant management FCA certification function. … 10C.9 Minimising overlap with the PRA approved or notified persons regime … Introduction … 10C.9.3 G If a person’s job for a firm involves performing:
(1) an FCA-designated senior management function, the firm should apply to the FCA for approval or, as the case may be, give the FCA an SMF notification; (2) a PRA-designated senior management function, the firm should apply to the PRA for approval or, as the case may be, give the PRA an SMF notification; (3) both an FCA-designated senior management function and a PRAdesignated senior management function, the firm should apply to both the FCA and the PRA for approval (the purpose of SUP 10C.9

FCA 202X/YY is to cut down the need for this sort of dual approval) or, as the case may be, give both the FCA and the PRA an SMF notification (or give notice to one and apply for approval to the other). 10C.9.3 A G The purpose of SUP 10C.9 is to cut down the need for the kind of dual approval or notification referred to in SUP 10C.9.3G(3). FCA controlled functions absorbed into PRA controlled functions 10C.9.4 G The FCA is under a duty, under section 59A of the Act (Specifying functions as controlled functions: supplementary), to exercise the power to specify any senior management function as an FCA controlled function in a way that it considers will minimise the likelihood that approvals need to be given by, or notifications need to be given to, both the FCA and the PRA for the performance by a person of senior management functions in relation to the same PRA-authorised person. 10C.9.5 G The FCA and PRA have coordinated their approved person approved or notified person regimes to reduce the amount of overlap. 10C.9.6 G (1) SUP 10C.9.8R applies when a firm is seeking approval from or, as the case may be, planning to give an SMF notification to, the PRA for a candidate to perform a PRA controlled function and the intention is that the candidate will also perform what would otherwise be an FCA governing function once the PRA gives its approval or the notification takes effect. SUP 10C.9.8R works by disapplying that FCA governing function. (2) Where (1) applies, the activities within that FCA governing function are included in the PRA controlled function for which that the person has approval holds. Chapter Two of the part of the PRA’s rulebook titled ‘Senior Management Functions’ deals with this. The following parts of the PRA Rulebook deal with this:
…
10C.9.7 G (1) SUP 10C.9.9G gives some examples of how SUP 10C.9.8R works. (2) The examples do not cover the other overall responsibility function because that function does not apply if the person holds any other designated senior management function for the same firm. See the
table in SUP 10C.7.3G for examples of how this works.
The main rule
10C.9.8 R A person (referred to as ‘A’ in this rule) is not performing an FCA governing function (referred to as the ‘particular’ FCA governing function in

FCA 202X/YY this rule) in relation to a PRA-authorised person (referred to as ‘B’ in this rule), at a particular time, if:
(1) one of the following has occurred:
(a) A has been approved by the PRA to perform any PRAdesignated senior management function in relation to B; or (b) B has given an SMF notification to the PRA (which has become effective) in respect of the performance by A of any PRA-designated senior management function in relation to B; (2) throughout the whole of the period between the time of the PRA approval in (1) or, as the case may be, the notification in (1) becoming effective, and the time in question, A has been the subject of a current PRA approved person approval to perform current SMF approval or notification in respect of a PRA-designated senior management function in relation to B; (3) at the time of the PRA approval referred to in (1) or, as the case may be, the notification in (1) becoming effective, A was not subject to a current FCA approved person approval to perform current SMF approval or notification in respect of the particular FCA governing function in relation to B; (4) as part of the application for the PRA approval or of the notification to the PRA referred to in (1), B notified the PRA that A would start to perform what would otherwise have been the particular FCA governing function (referred to as the ‘potential’ FCA governing function in this rule) at or around the time of the PRA approval in (1) or, as the case may be, of the SMF notification to the PRA in (1) becoming effective; and (5) A started to perform the potential FCA governing function at, or around the time of, the PRA approval in (1) or, as the case may be, the SMF notification to the PRA in (1) becoming effective, and has continued to perform it up to the time in question (ignoring any occasions on which A has temporarily ceased to perform that function because, for example, of holidays or illness). 10C.9.9 G Table: Examples of how the need for dual FCA and PRA approval in relation to PRA-authorised persons is reduced Example Whether FCA approval required Whether PRA Comments

FCA 202X/YY approval required
…
(6) A is appointed as an executive director. Later, A takes on the chief risk officer function and remains as an executive director. … … When A is appointed as chief risk officer, A is still treated as carrying on the executive director function. A retains the status of an FCA-approved person FCAapproved or notified person. … (8) A is appointed as an executive director and chief risk officer at the same time. Later, A gives up the role as chief risk officer but remains as an executive director. No, on A’s first appointment (see example (1)). But when A gives up the role as chief risk officer, FCA approval is needed to perform the executive director function. Form E should be used. The application should state that it is being made as a result of A ceasing to perform a PRAdesignated senior management function. Form A should be used if there have been changes in A’s fitness (SUP 10C.10.9D(4)) … … …

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(11) A is appointed to be chair of the governing body and chair of the nomination committee at the same time. No. A does not need approval to perform the A’s performance of the chair of the nomination committee function does not need to be notified to the FCA. … … … Note 2: … Note 3: In order to simplify the drafting of the table, it is assumed (except in example (11)) that the SMF notification procedure and the PRA equivalent do not apply. … Further guidance on the arrangements between the FCA and PRA about approvals and notifications … 10C.9.1 2 G … 10C.9.1 3 G An SMF notification to the PRA does not need to be copied by the firm to the FCA. 10C.9.1 4 G No FCA consent is required for an SMF notification to the PRA to become effective. 10C.10 Application for approval and withdrawing an application for approval Purpose 10C.10.1 G (1) This section explains:
(a) how the statutory requirements relating to an application by a firm should apply for approval for a person to perform an FCA-designated senior management function.; and (b) certain requirements relating to such applications. (2) However, the details of how to apply for such approval, including the application forms to be used, the information to be supplied and

FCA 202X/YY the applicable directions made under the Act, are not included or described in this chapter. They are instead included in the section of the FCA’s website covering SMCR applications and notifications. (3) Every FCA-designated senior management function is subject to the approval procedure described in this section except for those shown as being subject to the SMF notification procedure in SUP 10C
Annex 1 (What functions apply to what type of firm).
10C.10.2 R
G
Unless the context otherwise requires, in SUP 10C.10 (Application for approval and withdrawing an application for approval) to SUP 10C.15 (Forms and other documents Notifications and how to submit them to the FCA), where reference is made to a firm, this includes an applicant for Part 4A permission and other persons seeking to carry on regulated activities as an SMCR firm. 10C.10.2 A D SUP 10C.10.2R applies to every direction in SUP 10C.10 to SUP 10C.15. [deleted] When to apply for approval 10C.10.3 G (1) Section 59 of the Act (Approval and notification for particular arrangements) says that a firm must take reasonable care to ensure that no one performs an FCA controlled function (including an FCAdesignated senior management function) unless that person is acting in accordance with an approval given by the FCA. (2) … (3) However, if an FCA-designated senior management function is subject to the SMF notification procedure, a firm may not apply for approval. It should use the SMF notification procedure instead. Failure to apply for approval 10C.10.4 G (1) If a person performs an FCA controlled function (including an FCAdesignated senior management function) without approval where the SMF notification procedure does not apply, it is not only the firm that is accountable. Under section 63A of the Act (Power to impose penalties), if the FCA is satisfied that:
…
(2) A person performs a controlled function without approval for these purposes if that person is not acting in accordance with an approval given under section 59 (Approval and notification for particular arrangements).

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Who should make the application?
10C.10.5 G In accordance with section 60 of the Act (Applications for approval), applications must be submitted by, or on behalf of, the firm itself, not by:
…
(2) (where the FCA candidate works for the firm's parent undertaking or holding company) by the firm's parent undertaking or holding company. 10C.10.6 G (1) The firm that is employing the FCA candidate to perform the FCAdesignated senior management function will usually make the submission itself. [deleted] (SUP 10C.10.7G describes some common situations.) (2) Where a firm has outsourced the performance of an FCA-designated senior management function, the details of the outsourcing determines whom the FCA anticipates will submit the FCAapproved persons application forms. (3) The firm which is outsourcing is referred to as ‘A’ and the person to whom the performance of the FCA-designated senior management function has been outsourced, or which makes the arrangement for the FCA-designated senior management function to be performed, is referred to as ‘B’. In each situation, A must take reasonable care to ensure that, in accordance with section 59(2) of the Act, no person performs an FCA-designated senior management function under an arrangement entered into by its contractor in relation to the carrying on by A of a regulated activity, without approval from the FCA. 10C.10.7 G Outsourcing arrangements [deleted] Outsourcing arrangements Explanation Submitting form Firm A to firm B The FCA will consider A to have taken reasonable care if it enters into a contract with B under which B is responsible for ensuring that the relevant FCA-designated senior management functions are performed by FCA-approved SMF Firm B submits FCAapproved persons forms on behalf of firm A.

FCA 202X/YY managers, and that it is reasonable for A to rely on this. Outsourcing by A to B (both being a member of the same United Kingdom group and each having its registered office in the United Kingdom) See SUP 10C.3.9G Either A or B may submit FCA-approved persons forms on behalf of firms in the group (see SUP 15.7.8G). (i) A to B, where B:
(a) is not an authorised person; and
(b) is not part of the same group as A; or (ii) A to B, where A is a branch of an overseas firm in the United Kingdom, and B is an overseas undertaking of the same group; or (iii) A to B, where A is a UK authorised subsidiary of an overseas firm and B is an overseas undertaking of the same group. Responsibility for (as opposed to the performance of) any activity outsourced to B will remain with A. See SYSC 8. A ensures that an individual approved by the FCA or the PRA to perform a designated senior management function has responsibility for the outsourced arrangement and A submits a form in relation to that individual. How to apply for approval 10C.10.8 D (1) An application by a firm for the FCA’s approval under section 59 of the Act (Approval for particular arrangements) for the performance of an FCA-designated senior management function must be made by completing Form A (SUP 10C Annex 3D), except where SUP 10C.10.9D requires Form E. [deleted]

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(2) If a firm must make an application using Form A, it must use Form A (shortened form) in the circumstances described in SUP 10C.10.8AD. 10C.10.8 A D If a firm must make an application using Form A, it must use Form A (shortened form) if: [deleted] (1) the candidate:
(a) has current approved person approval to perform:
(i) an FCA controlled function that is a significantinfluence function; or (ii) an FCA-designated senior management function; or (iii) a PRA controlled function; or (b) has had current approved person approval of the type described in (a) within the previous six months; and (2) there have been no matters arising in relation to the fitness and propriety of the person to whom the application relates which mean that the information provided to the FCA or the PRA regarding fitness and propriety in connection with the current approved person approval in (1)(a) or (b) may have changed since the application for that current approved person approval was made. 10C.10.8 B D A firm must not use Form A (shortened form) if: [deleted] (1) the firm is a MiFID investment firm (except a credit institution); and (2) SUP 10C.10.9BD applies to that application. 10C.10.9 D (1) A firm must use Form E (SUP 10C Annex 7D) where an approved person: [deleted] (a) is both permanently ceasing to perform one or more controlled functions; and (b) needs to be approved in relation to one or more FCAdesignated senior management function; within the same firm or group. (2) A firm must not use Form E if the approved person has never before been approved to perform for any firm:

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(a) an FCA controlled function that is a significant-influence function; (b) an FCA-designated senior management function; or (c) a PRA controlled function. (3) A firm must not use Form E if the approved person has not been subject to a current approved person approval from the FCA or PRA to perform for any firm for more than six months:
(a) an FCA controlled function that is a significant-influence function; (b) an FCA-designated senior management function; or (c) a PRA controlled function. (4) A firm must not use Form E if:
(a) a notification has been made or should be made:
(i) to the FCA under SUP 10C.14.18R (Changes in fitness to be notified under Form D); or (ii) (if the firm is a PRA-authorised person) to the PRA under any equivalent PRA rule; (iii) to the FCA under SUP 10A.14.17R (the equivalent to (i) in SUP 10A); (whichever is applicable); (b) a notification has been made or should be made to the FCA or (if the firm is a PRA-authorised person) PRA under any of the following:
(i) section 63(2A) of the Act (Duty to notify regulator of grounds for withdrawal of approval); or (ii) [deleted] (iii) section 64C of the Act (Requirement for relevant authorised persons to notify regulator of disciplinary action); or (c) (if the firm is a PRA-authorised person) a notification has been made or should be made to the PRA under any

FCA 202X/YY provision of the PRA Rulebook corresponding to the requirements in (b); or (d) any of the circumstances in SUP 10C.14.7R (Qualified Form C) apply; in relation to any:
(e) controlled functions which that person is ceasing to perform (as referred to in (1)); or (f) any controlled function that they are continuing to perform for that firm or a firm in the same group. 10C.10.9 A G (1) The MiFID authorisation and management body change notification ITS requires that MiFID investment firms (except credit institutions) submit the Annex III information on a specified template (which is based on one prepared by ESMA and which is available at https://www.fca.org.uk/publication/forms/mifid-changesmanagement-body-form.docx (‘Annex III template’)) where there is a change to a member of the management body or a person who effectively directs the business. [deleted] (2) MiFID investment firms (except credit institutions) need to submit this Annex III template within ten business days of the change in the online notification and application system (also known as Connect). (3) SUP 10C.10.9BD explains how this requirement fits in with the requirement to submit a Form A or Form E. (4) [deleted] 10C.10.9 AA G (1) The MiFID authorisation and management body change notification ITS requires that a person applying to be a MiFID investment firm (except a credit institution) should notify the appropriate regulator of information about members of its management body by filling in the template set out in Annex II of the appropriate part of the MiFID authorisation and management body change notification ITS. [deleted] (2) This applies whether:
(a) the person is applying for authorisation; or (b) the person is a firm applying for a variation of its permission that would turn it into a MiFID investment firm.

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(3) There is no requirement to fill in the MiFID Article 4 SMR Information Form referred to in SUP 10C.10.9BD along with a Form A or Form E. 10C.10.9 B D Where: [deleted] (1) there is a change to a member of the management body or person who directs the business of a MiFID investment firm (except a credit institution) that the firm must notify to the appropriate regulator under Annex III of the appropriate part of the MiFID authorisation and management body change notification ITS; and (2) that change also requires the firm to apply for approval for that member or person to perform an FCA-designated senior management function; the firm must submit to the FCA the completed form found in SUP 10C
Annex 11D (MiFID Article 4 SMR Information Form) at the same time as
submitting the Form A or Form E about the candidate.
10C.10.9
C
G MiFID investment firms (except credit institutions) who submit: [deleted] (1) Form A or Form E; and (2) the MiFID Article 4 SMR Information Form; about a candidate can complete the Annex III template outlined in SUP 10C.10.9AG by cross-referring to any information required by the template that has been included in the relevant Form A or Form E. The template should be annexed to the relevant Form A or Form E. 10C.10.1 0 G SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications should be submitted. [deleted] 10C.10.1 0A G (1) A firm should only use a Form E (SUP 10C Annex 7D) when the candidate is ceasing to perform a controlled function in a way that means that the candidate will cease to be approved for that controlled function. [deleted] (2) See SUP 10C.14.5AG to SUP 10C.14.5DG for the difference between temporarily ceasing to perform a controlled function (which means that approval for the performance of that controlled function continues) and permanently ceasing to perform a controlled function (which means that approval for the performance of that controlled function lapses).

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(3) (1) and (2) are the reason that SUP 10C.10.9D refers to permanently ceasing to perform a controlled function. Statements of responsibilities 10C.10.1 1 G An application by a firm for the FCA’s approval under section 59 of the Act (Approval for particular arrangements) for the performance of an FCAdesignated senior management function should be accompanied by a statement of responsibilities about the candidate. [deleted] 10C.10.1 2 G SUP 10C.11 (Statements of responsibilities) contains more material about statements of responsibilities, including (in particular) about a statement of responsibilities submitted under an application under SUP 10C.10. [deleted] Other material to be included in an application 10C.10.1 3 G A firm to which SYSC 25.9 (Handover procedures and material) applies should include in an application a reasonable summary of: [deleted] (1) any handover certificate; and (2) any other handover material; referred to in SYSC 25.9 that relates to the responsibilities that the candidate is to perform. 10C.10.1 3A D A firm to which SYSC 25.2 (Management responsibilities maps: Main rules) applies must include in an application for the FCA’s approval under
section 59 of the Act (Approval for particular arrangements) for the
performance of an FCA-designated senior management function the latest version of the firm’s management responsibilities map. [deleted] 10C.10.1 3B G (1) This provision deals with a firm required to submit a management responsibilities map with an application to the FCA. [deleted] (2) A firm may make a number of closely linked changes to its senior management arrangements of which the application is part. The firm need not submit a different version of the management responsibilities map showing the position after each change. Instead, the firm may produce a single version showing the position after all the relevant changes have been carried out. (3) A series of changes may be linked because some are conditional on the others going ahead. However, changes can be linked in other circumstances, too.

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(4) The following are examples of closely linked changes as part of a re-organisation project:
(a) the firm intends to appoint a number of new SMF managers; (b) the firm intends to appoint a number of existing SMF managers to perform new designated senior management functions; or (c) the firm re-allocates responsibilities among its SMF managers. (5) If there is a significant time gap between linked changes, the FCA would expect the firm to produce a single version of the management responsibilities map for each phase of the changes. Vetting of candidates by the firm … 10C.10.1 5 G … 10C.10.1 5A G In deciding the question in SUP 10C.10.14G, an SMCR firm making a permitted conditional SMF application may have regard to any conditions or limited periods requested in the application. Criminal records checks and verifying fitness and properness 10C.10.1 6 R (1) This rule applies to an application by a firm for the FCA’s approval under section 59 of the Act (Approval and notification for particular arrangements) for the performance of an FCA-designated senior management function. … (3) This rule does not apply:
…
(b) if the candidate is already performing, and has approval for the performance of a designated senior management function subject to a current SMF approval or notification for the firm or another firm in the same group; (c) if the candidate was performing, and had approval for the performance of, a designated senior management function was subject to a current SMF approval or notification for the

FCA 202X/YY firm or another firm in the same group within 1 month before the submission of the application for approval in (1); or … … … 10C.10.1 8 G The section of the FCA’s website covering SMCR applications and notifications deals with when and whether a firm should not send a copy of the certificate to the FCA unless required to do so under SUP 10C.10.18AG or. A firm should also send it if required to do so under the requirements summarised in SUP 10C.10.28G (requests for additional information). 10C.10.1 8A G MiFID investment firms (except credit institutions) should provide a copy of the certificate to the FCA in cases where they disclose, in accordance with the MiFID authorisation and management body change notification ITS, the existence of a criminal conviction in response to the questions in:
[deleted]
(a) Long Form A; or
(b) the MiFID Article 4 SMR Information Form.
…
10C.10.2
3A
G …
(2) The requirement in section 63(2A) of the Act is summarised in SUP 10C.14.24G (Table: Explanation of the sections of the Act and Handbook mentioned in SUP 10C.14.22R). Processing an application … 10C.10.2 5 G In any case where the application for approval is made by a person applying for a Part 4A permission, the FCA has until the end of whichever of the following periods ends last:
…
(2) the period of three 2 months from the time it receives a properly completed application.

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10C.10.2
6
G In any other case, it is the period of three 2 months from the time it receives a properly completed application. 10C.10.2 7 G The FCA will deal with cases more quickly than this whenever circumstances allow and will try to meet the standard response times published on the website and in its Annual Report. However, the processing time will be longer than the published standard response times if: [deleted] (1) an application is incomplete when received; or (2) the FCA has knowledge that, or reason to believe that, the information is incomplete. 10C.10.2 8 G Before making a decision to grant the application or give a warning notice, the FCA may ask the firm for more information about the FCA candidate. If it does this, the three-month 2-month period in which the FCA must determine a completed application:
…
10C.10.2
9
G If there is a delay in processing the application within the standard response time, the FCA will tell the firm making the application as soon as this becomes apparent. [deleted] 10C.10.3 0 G (1) Application forms must always be completed fully and honestly. Further notes on how to complete the form are contained in each form. … … Decisions on applications 10C.10.3 3 G The FCA must do one of the following in response to a valid and complete application:
(1) grant the application without conditions or limitations (if the application is not a permitted conditional SMF application); (1A) (in the case of a permitted conditional SMF application) grant the application subject to the conditions or limitations applied for; (1B) (in the case of a permitted conditional SMF application) grant the application but without some or all of the conditions or limitations applied for;

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(2) (if the application is not a permitted conditional SMF application) grant the application subject to conditions or limitations (see SUP 10C.12 for more information); or (2A) (in the case of a permitted conditional SMF application) grant the application subject to conditions or limitations in addition to or instead of the conditions or limitations applied for; or (3) refuse the application. 10C.10.3 4 G Whenever it grants an application in accordance with SUP 10C.10.33G(1), SUP 10C.10.33G(1A) or SUP 10C.10.33G(1B), the FCA will confirm this in writing to all interested parties. 10C.10.3 5 G If the FCA proposes to take the steps in SUP 10C.10.33G(2), SUP 10C.10.33G(2A) or SUP 10C.10.33G(3) in relation to one or more FCAdesignated senior management functions, it must follow the procedures for issuing warning and decision notices to all interested parties. The requirements relating to warning and decision notices are in DEPP 2. 10C.10.3 5A G See SUP 10C.12 for more information about conditional and time-limited approvals. Withdrawing an application for approval 10C.10.3 6 R A firm notifying the FCA of its withdrawal of an application for approval must use Form B (SUP 10C Annex 4R). include the following in the notice in addition to the information required by SUP 10C.15.15R (Standard information for all notifications):
(1) the reasons for the withdrawal (such as the resignation of or termination of employment of the candidate or the firm deciding that the candidate was not a fit and proper person to perform the function to which the application relates); (2) the consents required by section 61(5) of the Act (Determination of applications) or copies of them; and (3) information that will enable the FCA to identify the application, such as its reference number. … 10C.10.3 8 G SUP 10C.15 (Forms and other documents Notifications and how to submit them to the FCA) explains how a notice of withdrawal should be submitted.

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Insert the following new section, SUP 10C.10A, after SUP 10C.10 (Application for approval and withdrawing an application for approval). The text is all new and is not underlined. 10C.10A Notification of the performance of an FCA-designated senior management function Purpose 10C.10A .1 G (1) This section explains:
(a) the statutory procedure by which a firm may permit a person to perform an FCA-designated senior management function by notifying the FCA rather than by applying for the FCA’s approval as described in SUP 10C.10 (Application for approval and withdrawing an application for approval); (b) when that notification procedure applies; and (c) certain requirements relating to such applications. (2) However, the details of how to make such a notification, including the notification forms to be used, the information to be supplied and the applicable directions made under the Act, are not included or described in this chapter. They are instead included in the section of the FCA’s website covering SMCR applications and notifications. When the SMF notification procedure applies 10C.10A .2 R SUP 10C Annex 1 (What functions apply to what type of firm) sets out the FCA-designated senior management functions to which the SMF notification procedure applies. When to notify 10C.10A .3 G (1) Where the SMF notification procedure applies, section 59 of the Act (Approval and notification for particular arrangements) says that a firm must take reasonable care to ensure that no one performs an FCA-designated senior management function unless that person is acting in accordance with a notification given to the FCA. (2) That means that where a person will be performing one or more FCA-designated senior management functions, a firm must take reasonable care to ensure that the candidate does not perform these functions unless the firm has notified the FCA and the notification has become effective.

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(3) Where the SMF notification procedure applies to an FCAdesignated senior management function, a firm should not apply for approval for a person to perform that FCA-designated senior management function. Failure to notify 10C.10A .4 G (1) If a person performs an FCA-designated senior management function without notifying the FCA where the SMF notification procedure applies, it is not only the firm that is accountable. Under
section 63A of the Act (Power to impose penalties), if the FCA is
satisfied that:
(a) a person (‘P’) has at any time performed an FCA-designated senior management function without notification; and (b) at that time P knew, or could reasonably be expected to have known, that P was performing an FCA-designated senior management function without notification, it may impose a penalty on P of such amount as it considers appropriate. (2) A person performs an FCA-designated senior management function without notification for these purposes if that person is not acting in accordance with a notification given under section 59 (Approval and notification for particular arrangements). (3) A person should not begin to perform an FCA-designated senior management function subject to the SMF notification procedure before the effective date of the SMF notification. Who should make the notification? 10C.10A .5 G In accordance with section 59 of the Act (Approval and notification for particular arrangements), notifications must be submitted by, or on behalf of, the firm itself, not by:
(1) the person who is to perform the function; or (2) (where that person works for the firm’s parent undertaking or holding company) the firm’s parent undertaking or holding company. Vetting by the firm

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10C.10A
.6
G Under section 60A of the Act, before a firm makes a notification, it should be satisfied that the person who is to perform the FCA-designated senior management function is a fit and proper person to perform that function. In deciding that question, the firm should have particular regard to the factors set out in SUP 10C.10.14G (Vetting of candidates by the firm). 10C.10A .7 G For guidance on criteria that a firm should use for assessing whether a person is fit and proper, see FIT. Criminal records checks and verifying fitness and properness 10C.10A .8 R (1) This rule applies to a proposed SMF notification by a firm in relation to an FCA-designated senior management function. (2) A firm must (as part of its assessment of whether a person is a fit and proper person to perform the FCA-designated senior management function and to verify the information contained in the SMF notification) obtain the fullest information that it is lawfully able to obtain about the candidate under Part V (Certificates of Criminal Records, &c) of the Police Act 1997 and related subordinated legislation of the UK or any part of the UK before making the notification. (3) The exceptions in SUP 10C.10.16R (Criminal records checks and verifying fitness and properness) apply to this rule too. (4) A firm must, so far as it is reasonably able, ensure that the information it obtains under this rule is no older than 6 months, measured from the time the firm submits its notification to the FCA. 10C.10A .9 G The following guidance applies to SUP 10C.10A.8R and the checks referred to in SUP 10C.10A.6G in the same way as it does to checks made as part of an application for approval:
(1) SUP 10C.10.17G (Criminal records checks and verifying fitness and properness); and (2) SUP 10C.10.19G to SUP 10C.10.23AG. 10C.10A .10 G The section of the FCA’s website covering SMCR approvals and notifications deals with when and whether a firm should send a copy of the certificate to the FCA along with the notification. Withdrawing a notification 10C.10A .11 R A firm notifying the FCA of its withdrawal of a notification must:

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(1) include in the notice:
(a) the information and matters listed in SUP 10C.10.36R(1) and (2) (Withdrawing an application for approval); and (b) information that will enable the FCA to identify the notification; and (2) give the notice in accordance with SUP 10C.10.36R. 10C.10A .12 G A notification cannot be withdrawn after it has taken effect. 10C.10A .13 G Under section 61(5) of the Act (Determination of applications), the firm may withdraw a notification only if it also has the consent of:
(1) the candidate; and
(2) the person by whom the candidate is or would have been employed, if this is not the firm giving the notice. 10C.10A .14 G SUP 10C.15 (Notifications and how to submit them to the FCA) explains how a notice of withdrawal should be submitted. When a notice takes effect 10C.10A .15 G A notification does not depend on any approval of or non-objection by the FCA to become effective. It is not subject to any prior vetting by the FCA or the FCA reaching any view about the fitness and properness of the SMF manager to perform the function. 10C.10A .16 R An SMF notification in respect of an FCA-designated senior management function takes effect on the later of:
(1) the date on which the FCA confirms submission of the notification in writing; or (2) the date of appointment specified in the notification, which may be no later than 3 months from the date the firm makes the SMF notification. When a notification is ineffective 10C.10A .17 R An SMF notification made by a firm in respect of an FCA-designated senior management function to be performed by a person in relation to the firm is ineffective if:

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(1) it is not made in accordance with any direction made by the FCA under section 60ZA of the Act (Notifications under section 59) (including any failure to use the prescribed form of notification or method of submission or any failure to provide supporting material the firm is directed to supply); or (2) the performance of that FCA-designated senior management function by that person (or any part of it) for that firm would infringe a prohibition order made in respect of that person. 10C.10A .18 G An SMF notification in respect of an FCA-designated senior management function is also ineffective if:
(1) it would be contrary to a requirement described in section 60ZA(6) (Notifications under section 59) and referred to in SUP 10C.10A.21G; (2) the FCA-designated senior management function is not specified in SUP 10C Annex 1 (What functions apply to what type of firm) as being subject to the SMF notification procedure; or (3) it has been withdrawn. Treatment of a notified SMF manager 10C.10A .19 G An SMF manager who was subject to the SMF notification procedure is subject to the same rules as an SMF manager who has been approved in accordance with SUP 10C.10 (Application for approval and withdrawing an application for approval) and is treated by the Handbook in the same way. 10C.10A .20 G An SMF manager who was subject to the SMF notification procedure is for the most part treated under the Act in the same way as an SMF manager who has been approved in accordance with SUP 10C.10. The main exception is that an approval may be given subject to conditions or a time limitation whereas a condition or time limitation can only be applied to a notification by way of a variation (see SUP 10C.13 (Variation of conditional and time-limited approvals and notifications)). Withdrawing the right to notify 10C.10A .21 G (1) Under section 60ZA(6) of the Act (Notifications under section 59), a requirement imposed by the FCA or the PRA may prevent a firm making a notification under section 59 of the Act.

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(2) The requirement is imposed under section 55L of the Act (Imposition of requirements by FCA) or section 55M of the Act (Imposition of requirements by PRA). 10C.10A .22 G Such a requirement may:
(1) prevent a firm making any notification; (2) prevent a firm making any notification in relation to a particular designated senior management function; (3) apply by reference to the characteristics of the person who is to perform the function; or (4) apply by reference to anything else that the FCA or the PRA considers appropriate. 10C.10A .23 G The automatic effect of such a requirement in relation to an FCAdesignated senior management function is that the firm must seek approval under the procedure described in SUP 10C.10 (Application for approval and withdrawing an application for approval) if it wishes a person to perform that function. That consequence is the effect of the Act and is not provided for in the requirement. 10C.10A .24 G SUP 6B (Variation and cancellation of permission and imposition of requirements on the FCA’s own initiative and intervention against incoming firms) and SUP 7 (Individual requirements) describe the grounds on which a requirement can be imposed by the FCA, when the FCA might use the power and the procedure for doing so. 10C.10A .25 G The following are examples of when the FCA will consider exercising its own-initiative power to prevent a firm from notifying:
(1) where there are serious concerns about the firm’s governance; (2) where there are serious concerns about the firm’s ability or willingness appropriately to assess the fitness and properness of persons it notifies; or (3) where a role covered by an FCA-designated senior management function has particular importance in relation to the firm’s safety and soundness, the judgement about whether this is the case being based on the particular firm’s circumstances. 10C.10A .26 G A firm may apply to the FCA under section 55L of the Act or to the PRA under section 55M of the Act to impose a requirement of the kind in SUP 10C.10A.22G. SUP 6 (Applications to vary and cancel Part 4A permission

FCA 202X/YY and to impose, vary or cancel requirements) deals with such applications made to the FCA. 10C.10A .27 G The imposition of a requirement of the kind in SUP 10C.10A.22G to prevent a firm from notifying does not:
(1) invalidate the appointment an SMF manager whose appointment under the SMF notification process has already become effective; or (2) prevent an SMF notification becoming effective if the requirement is imposed after the SMF notification has been made but before the SMF notification becomes effective. SUP 10C.11 (Statements of responsibilities) is deleted in its entirety. The deleted text is not shown but the section is marked ‘[deleted]’ as shown below. 10C.11 Statements of responsibilities [deleted] Amend the following as shown. 10C.12 Conditional and time-limited approvals Purpose 10C.12.1 G … (2) In particular, SUP 10C.12 sets out:
(a) the FCA’s policies on giving approval under section 59 subject to conditions or for a limited period only, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation).; and (b) rules and guidance on the right of a firm to apply for an approval subject to conditions or time-limitations. … (4) Material on variations of conditional and time-limited approvals or notifications can be found in SUP 10C.13 (Variation of conditional and time-limited approvals). (5) This section does not apply to an SMF notification except insofar as SUP 10C.13 applies the policies in this section to the variation of an SMF notification (see in particular SUP 10C.13.18G (Variation of a

FCA 202X/YY conditional approval or notification at the request of the firm:
policy)).
(6) There is no procedure under which an SMCR firm may either apply a condition or time limitation to an SMF notification itself or apply to the FCA for the FCA to apply a condition or time limitation to an SMF notification that the firm is making. … Time-limited approval … 10C.12.8 G The FCA would not generally impose a time limitation in these circumstances for a period of less than 12 18 weeks. The FCA would expect the firm to use the 12-week 18-week rule in SUP 10C.3A.6R. 10C.12.9 G An example of when the FCA may approve an individual on a time-limited basis is where, following a sudden or unexpected departure:
…
(2) it is likely to take longer than 12 18 weeks (or longer than the extended period in SUP 10C.3A.8R) to recruit a permanent replacement; and … … 10C.12.4 7 G … Application by a firm for an approval subject to conditions or a time limitation 10C.12.4 8 G A firm may not apply for an approval subject to conditions or a time limit unless SUP 10C.12.49R allows this. An application permitted by SUP 10C.12.49R is a ‘permitted conditional SMF application’. 10C.12.4 9 R A firm may make an application for approval under section 60 of the Act (Applications for approval) for the performance of an FCA-designated senior management function that is an application for approval subject to conditions or for a limited period (or both) if the firm is:
(1) a PRA-authorised person;
(2) an enhanced scope SMCR firm; or

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(3) a member of a group that has as a member at least one SMCR firm falling within (1). 10C.12.5 0 G The FCA’s policies about when it will give an approval subject to conditions or a time limit as set out in this section apply to a time limit or condition applied for under a permitted conditional SMF application. 10C.12.5 1 G The FCA is unlikely to agree to a condition or time limit if it could be difficult, impractical or burdensome for the FCA to determine whether the time limit or condition is being complied with. 10C.12.5 2 G The details of how to make a permitted conditional SMF application, including the application forms to be used, the information to be supplied and the applicable directions made under the Act, are not included or described in this chapter. They are instead included in the section of the FCA’s website covering SMCR applications and notifications. 10C.13 Variation of conditional and time-limited approvals and notifications Purpose 10C.13.1 G This section deals with variation of a conditional approval at the:
(1) the variation of a conditional approval or conditional SMF notification at the request of the firm; and (2) the variation of an approval or SMF notification at the initiative of the FCA. 10C.13.2 G (1) In particular, this section sets out the FCA’s policies about varying conditional approvals or conditional SMF notifications at the request of a firm, as required by section 63ZD of the Act (Statement of policy relating to conditional approval and variation). (2) This section does not deal with the FCA’s policies on varying a condition or SMF notification on its own initiative. DEPP 8 deals with that. However, this section gives a short description of the FCA’s powers to impose such variations. Variation of a conditional approval or notification at the request of the firm:
general description
10C.13.3 G A firm may apply to the FCA to change a conditional or time-limited approval or notification. The changes for which a firm may apply are:
…

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(4) where the approval or notification is time-limited:
…
10C.13.4 G …
(2) If the firm is applying for the imposition of a new condition, the firm should apply to the FCA if the approval or notification to which the application relates was given by or to the FCA. (2A) If a firm is applying for a change of the type described in SUP 10C.13.3G(1) or SUP 10C.13.3G(2), the firm should (subject to (2C)) apply to the FCA if the FCA imposed that condition, even if the approval or notification was given by or to the PRA. (2B) If a firm is applying for a change of the type described in SUP 10C.13.3G(4), the firm should (subject to (2C)) apply to the FCA if the FCA imposed that time limit, even if the approval or notification was given by or to the PRA. … 10C.13.5 G The right to apply for a variation does not include the right to apply for a time limitation where the current approval or notification has effect for an unlimited period. 10C.13.5 A G The procedures described in this section for the variation of an approval or notification at the request of a firm do not apply where the condition or time limit has effect by virtue of section 66 of the Act (Disciplinary powers). 10C.13.5 B G There is no procedure under which a firm may apply to the FCA for the FCA to apply a condition or time limitation to an existing approval or SMF notification that is not already subject to a condition or time limitation. Variation of a conditional approval at the request of the firm: process 10C.13.6 D G An application by The details of how a firm should apply to the FCA under
section 63ZA of the Act (Variation of senior manager’s approval or
notification at request of authorised persons) must be made by using Form I (SUP 10C Annex 8D), including the application forms to be used, the information to be supplied and the applicable directions made under the Act, are not included or described in this section. They are instead included in the section of the FCA’s website covering SMCR applications and notifications.

FCA 202X/YY
10C.13.7 G (1) An application under SUP 10C.13.6D should be accompanied by a statement of responsibilities for the approved person concerned. [deleted] (2) See SUP 10C.11 (Statements of responsibilities) for more details. 10C.13.8 G SUP 10C.15 (Forms and other documents and how to submit them to the FCA) explains how applications to vary a conditional approval should be submitted. [deleted] 10C.13.9 G The FCA has until the end of the period of three 2 months from the time it receives a properly completed application to consider the application and come to a decision. … 10C.13.1 2 G Before making a decision to grant the application or give a warning notice, the FCA may ask the firm for more information. If it does this, the threemonth 2-month period in which the FCA must determine a completed application:
…
…
10C.13.1
5
R A firm notifying the FCA of its withdrawal of an application for variation of an a conditional approval or SMF notification must use Form B (SUP 10C
Annex 4R) include in the notice the information and matters listed in SUP
10C.10.36R (Withdrawing an application for approval) and give the notice in accordance with that rule but as if references to the candidate were to the SMF manager to which the application relates. 10C.13.1 6 G SUP 10C.15 (Forms and other documents Notifications and how to submit them to the FCA) explains how notifications of withdrawal of an application should be submitted. 10C.13.1 7 G Under section 61(5) of the Act (Determination of applications), as applied by section 63ZA(8) of the Act (Variation of senior manager’s approval or notification at request of authorised person), the firm may withdraw an application only if it also has the consent of:
(1) the approved person approved or notified person; and (2) the person by whom the approved person approved or notified person is employed if this is not the firm making the application.

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Variation of a conditional approval or notification at the request of the firm:
policy
10C.13.1
8
G The FCA’s policy on approving or refusing a request for a variation of an approval or of an SMF notification is the same as it is for imposing conditions on approval (see SUP 10C.12 (Conditional and time-limited approvals)). … 10C.13.2 1 G (1) Other examples of where the FCA may agree to removing a condition are where:
(a) the approved person’s approved or notified person’s role has changed so that the reason for the condition originally being imposed no longer applies; or (b) new information has come to light that removes any doubt about the approved person’s approved or notified person’s competence so a condition is no longer necessary. (2) For example, the FCA may agree to removing a condition about the scope of the approved person’s approved or notified person’s role of the type described in SUP 10C.12.39G. … Variation of a conditional approval or notification: action at the initiative of the FCA 10C.13.2 3 G Under section 63ZB of the Act (Variation of senior manager’s approval or notification on initiative of regulator), the FCA may vary an approval or SMF notification given by or to the FCA or the PRA for the performance of a designated senior management function if the FCA considers that it is desirable to do so to advance one or more of its operational objectives. 10C.13.2 4 G The FCA may vary an approval or SMF notification by:
…
(4) limiting the period for which the approval or SMF notification is to have effect; or (5) removing or varying a time limit on an approval or SMF notification. …

FCA 202X/YY
10C.14 Changes to an FCA-approved or notified person’s details Moving within a firm 10C.14.1 G (1) An FCA-approved SMF manager’s FCA-approved or notified SMF manager’s job may change from time to time as a result, for instance, of a change in personal job responsibilities or a firm’s regulated activities. (2) Where the changes will involve the SMF manager performing one or more FCA-designated senior management functions different from those for which approval has already been granted (or, as applicable, SMF notification made), an application must be made to the FCA for approval for the SMF manager to perform those FCA-designated senior management functions or, as applicable, an SMF notification should be made to the FCA of the performance of those FCAdesignated senior management functions. (3) The firm must take reasonable care to ensure that an individual does not begin performing an FCA-designated senior management function until the FCA has granted FCA-approved SMF manager FCA-approved or notified SMF manager status to that individual for that FCA-designated senior management function or, as applicable, an SMF notification has been made to the FCA of the performance of that FCA-designated senior management function by that person that has become effective. (4) Similarly (in the case of a PRA-authorised person), a firm must get the FCA’s approval (or, as applicable, must make an SMF notification) if an individual is to start performing an FCAdesignated senior management function in relation to that firm when they already have the PRA’s approval to perform a PRA-designated senior management function (or, as applicable, if the firm has already made an SMF notification to the PRA) in relation to that firm. 10C.14.2 G (1) A firm should generally use Form E where an approved person is both ceasing to perform one or more controlled functions and needs to be approved in relation to one or more FCA-designated senior management functions within the same firm or group. [deleted] (2) In certain cases, a firm should use Form A. (2A) When a MiFID investment firm (except a credit institution) notifies the FCA of a change using Form A or Form E, it may also have to submit the MiFID Article 4 SMR Information Form (see SUP 10C.10.9BD).

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(3) The details can be found in SUP 10C.10.8D to SUP 10C.10.9CG. Moving between firms 10C.14.3 G If it is proposed that an FCA-approved SMF manager FCA-approved or notified SMF manager:
… the new firm will be required to make a fresh application for or notification of the performance of the FCA-designated senior management function by that person (see SUP 10C.10 (Application for approval and withdrawing an application for approval) and SUP 10C.10A (Notification of the performance of an FCA-designated senior management function) for details). 10C.14.4 G In certain circumstances, when the FCA already has the information it would usually require, a shortened version of the relevant Form A may be completed. See SUP 10C.10.8D to SUP 10C.10.8BD for full details. [deleted] Ceasing to perform an FCA-designated senior management function 10C.14.5 R (1) A firm must notify the FCA no later than ten business days after an FCA-approved SMF manager FCA-approved or notified SMF manager permanently ceases to perform an FCA-designated senior management function. (2) It must make include in that notification by submitting to the FCA a completed Form C (SUP 10C Annex 5R). the following information in addition to the information required by SUP 10C.15.15R (Standard information for all notifications):
(a) the FCA-designated senior management function in question; (b) the reasons for that cessation; and (c) the date of that cessation. (3) If: [deleted] (a) the firm is also making an application for approval for that approved person to perform a controlled function within the same firm or group; and

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(b) ceasing to perform the FCA-designated senior management function in (1) has triggered a requirement to make that application for approval:
(i) to the FCA using Form E (rather than a Form A) under SUP 10C.10.9D; or (ii) to the FCA using Form E (rather than a Form A) under SUP 10A; or (iii) (in the case of a PRA-authorised person) to the PRA using the PRA’s Form E in accordance with the corresponding PRA requirements; it must make the notification under (1) using that Form E. 10C.14.5 A G Permanently ceasing to perform an FCA-designated senior management function means that that person no longer has approval to perform that function or, as the case may, that the SMF notification ceases to have effect. Permanent cessation does not mean that that person cannot return to perform that function, rather that if they do, they will need fresh approval or a fresh notification. 10C.14.5 B G Examples of when an FCA-approved SMF manager FCA-approved or notified SMF manager will have permanently ceased to perform an FCAdesignated senior management function include moving within a firm (see SUP 10C.14.1G to SUP 10C.14.2G), moving between firms (see SUP 10C.14.3G to SUP 10C.14.4G), resignation, dismissal, retirement, and death. 10C.14.5 C G In cases of temporary absence (for example, sick leave or parental leave) where the firm is keeping the same role open for an FCA-approved SMF manager FCA-approved or notified SMF manager, approval to perform the relevant FCA-designated senior management function, or, as the case may be, the effect of the SMF notification, will continue and therefore the firm will not be required to submit a Form C (SUP 10C Annex 5R) notification under SUP 10C.14.5R. See SUP 10C.14.5IG for guidance on interim appointments. 10C.14.5 D G As a result, an FCA-approved SMF manager FCA-approved or notified SMF manager who returns to perform the same FCA-designated senior management function following such a temporary absence will not need fresh approval or notification. 10C.14.5 E R (1) If an FCA-approved SMF manager FCA-approved or notified SMF manager has been absent for more than 12 18 weeks, the firm must

FCA 202X/YY notify the FCA on Form D (SUP 10C Annex 6R) within seven business days of the end of the 12-week 18-week period. (2) It must also notify the FCA on Form D (SUP 10C Annex 6R) within seven business days of their return. (3) The notification must include, in addition to the information required by SUP 10C.15.15R (Standard information for all notifications), the following:
(a) the performance of which controlled functions are affected by the SMF manager’s absence; (b) the date from which the absence began; (c) whether the written notice relates to:
(i) their absence exceeding 18 weeks; or (ii) their return from an absence exceeding 18 weeks; (d) (where applicable) the date on which the SMF manager returned; and (e) the explanation for the absence or return. 10C.14.5 F G Where a firm is aware that an FCA-approved SMF manager FCA-approved or notified SMF manager will be absent for more than 12 18 weeks, that firm can notify the FCA prior to the end of the 12-week 18-week period. 10C.14.5 G G (1) The duty to notify in SUP 10C.14.18R and the sections provisions of the Act and the Handbook listed in SUP 10C.14.22R continue to apply during a temporary absence. (2) Where it would not be appropriate for a firm to require an FCAapproved SMF manager FCA-approved or notified SMF manager to participate in the assessment required under section 63(2A) of the Act during a temporary absence, it will not be necessary for that person to participate in that assessment in order for the firm to comply with this requirement. (3) Notwithstanding the guidance at (2), on an FCA-approved SMF manager’s FCA-approved or notified SMF manager’s return to a firm, the firm should consider whether it may be necessary to refresh any aspects of the assessment taking into account that the relevant person is now able to participate.

FCA 202X/YY
10C.14.5
H
G (1) Under section 62A of the Act, a firm must provide the FCA with a revised statement of responsibilities if there has been any significant change in the responsibilities of an FCA- approved SMF manager. [deleted] (2) SUP 10C.11.6G(6B) explains when a firm should submit a revised statement of responsibilities for an FCA-approved SMF manager who is temporarily absent and that the firm should also submit a revised statement of responsibilities on their return. (3) The requirement to submit a revised statement of responsibilities is in addition to the requirement to submit a Form D (SUP 10C Annex 6R). 10C.14.5 I G (1) Where an FCA-approved SMF manager FCA-approved or notified SMF manager is temporarily absent (see SUP 10C.14.5CG), a firm may decide to appoint another person to perform that FCAdesignated senior management function during the interim period. (2) Where the FCA-approved SMF manager FCA-approved or notified SMF manager was performing a FCA required function, the firm will be required to make an interim appointment. (3) Unless SUP 10C.3A.6R (The 12-week 18-week rule: The main rules) applies, the firm will be required to make a fresh application or SMF notification of or for the performance of the FCA-designated senior management function by the person who has been appointed for the interim period (see SUP 10C.10 (Application for approval and withdrawing an application for approval) and SUP 10C.10A (Notification of the performance of an FCA-designated senior management function)). It may be appropriate for the appointment to be time limited (see SUP 10C.12.7G to SUP 10C.12.14G (timelimited approvals) for details). … … 10C.14.6 G (1) SUP 10C.15 (Forms and other documents Notifications and how to submit them to the FCA) explains how notifications should be submitted. (2) The standard form made available by the FCA for notification under SUP 10C.14.5R may vary depending on the circumstances. For example, if the firm is also making an application for approval for that approved person to perform another controlled function within

FCA 202X/YY the same firm or group, the form for notification under SUP 10C.14.5R may be included in:
(a) the form the FCA provides for the application for the connected approval; or (b) the connected application for approval made to the PRA. 10C.14.6 A G (1) The MiFID authorisation and management body change notification ITS requires that a MiFID investment firm (except a credit institution) submit the information in Annex III of the appropriate
part of the MiFID authorisation and management body change
notification ITS on the Annex III template referred to in SUP 10C.10.9AG where there is a change to a member of the management body or a person who effectively directs the business. [deleted] (2) This means that a MiFID investment firm required to notify the FCA under (1) may also need to submit the Annex III information along with the Form C or Form E. (3) See SUP 10C.10.9AAG to SUP 10C.10.9CG for more about these notification requirements in a case in which the firm is applying for approval under section 59 of the Act (Approval for particular arrangements). 10C.14.7 R (1) A firm must notify the FCA as soon as practicable after it becomes aware, or has information which reasonably suggests, that it will submit a qualified Form C notification for an FCA-approved SMF manager FCA-approved or notified SMF manager. (2) Form C A notification is qualified if it is a notification under section 63(2A) of the Act (Duty to notify regulator of grounds for withdrawal of approval or invalidation of notification). It is also qualified if it is made another rule in this section or under a PRA rule corresponding to one of those rules and the information it contains:
(a) relates to the fact that the firm has dismissed, or suspended, the FCA-approved SMF manager FCA-approved or notified SMF manager from its employment; (b) relates to the resignation by the FCA-approved SMF manager FCA-approved or notified SMF manager while under investigation by the firm, the FCA or any other regulatory body; (c) otherwise reasonably suggests that it may affect the FCA’s assessment of the FCA-approved SMF manager’s FCA-

FCA 202X/YY approved or notified SMF manager’s fitness and propriety; or (d) includes a notification about the FCA-approved SMF manager FCA-approved or notified SMF manager under one of the provisions of the Act this chapter listed in SUP 10C.14.22R (notification of grounds for withdrawal of approval and disciplinary action). … 10C.14.9 G A firm is responsible for notifying the FCA if any FCA-approved SMF manager FCA-approved or notified SMF manager has permanently ceased to perform an FCA-designated senior management function under an arrangement entered into by its contractor or where any such FCA-approved SMF manager FCA-approved or notified SMF manager is temporarily absent. 10C.14.1 0 G (1) A firm can submit Form C or Form E (and any MiFID Article 4 SMR Information Form required by SUP 10C.10.9BD) a notification under SUP 10C.14.5R to the FCA in advance of the cessation date. … (3) If the firm:
(a) does not submit Form C a notification under SUP 10C.14.5R (including a qualified one) following notification under SUP 10C.14.7R; or (b) submits a form in advance under (1) but it turns out that there is no requirement to have done so (because for example the approved person approved or notified person is staying in post); it should inform the FCA in due course of the reason. This could be done using Form D, if appropriate. 10C.14.1 1 G (1) When a person ceases the arrangement under which they perform an FCA-designated senior management function, they will automatically cease to be an FCA-approved SMF manager FCAapproved or notified SMF manager in relation to that FCAdesignated senior management function. (2) A person can only be an FCA-approved SMF manager FCAapproved or notified SMF manager in relation to a specific FCAdesignated senior management function. Therefore, a person is not an FCA-approved SMF manager FCA-approved or notified SMF

FCA 202X/YY manager during any period between ceasing to perform one FCAdesignated senior management function (when they are performing no other FCA-designated senior management function) and being approved or notified for another FCA-designated senior management function. 10C.14.1 2 G Sending forms promptly will help to ensure that any fresh application can be processed within the standard response times. [deleted] Changes to an approved or notified person’s personal details 10C.14.1 3 R If an FCA-approved SMF manager’s FCA-approved or notified SMF manager’s title, name or national insurance number changes, the firm for which the person performs an FCA-designated senior management function must notify the FCA on Form D (SUP 10C Annex 6R), of that change within seven business days of the firm becoming aware of the matter. 10C.14.1 4 G The duty to notify in SUP 10C.14.13R does not apply to changes to an FCA-approved SMF manager’s FCA-approved or notified SMF manager’s private address. Changes to arrangements 10C.14.1 5 R (1) If any of the details relating to:
(a) the arrangements in relation to any of a firm’s FCA-approved SMF managers FCA-approved or notified SMF managers; or (b) any FCA-designated senior management functions of one of its FCA-approved SMF managers FCA-approved or notified SMF managers; are to change, the firm must notify the FCA on Form D (SUP 10C
Annex 6R).
…
(3) This rule does not apply to anything required to be notified under
section 62A of the Act (Changes in responsibilities of senior
managers) or SUP 10C.11 (Statements of responsibilities). [deleted] Notifying changes to details and arrangements 10C.14.1 5A R A notification under SUP 10C.14.13R or SUP 10C.14.15R must include, in addition to the information required by SUP 10C.15.15R (Standard information for all notifications), the following:

FCA 202X/YY
(1) details of the change;
(2) the date on which the firm reasonably believes the details or arrangements changed, or will have changed; (3) the date on which the firm became aware of the change; and (4) an explanation of the reason for the change. 10C.14.1 6 G SUP 10C.15 (Forms and other documents Notifications and how to submit them to the FCA) explains how notifications should be submitted. Revised statements of responsibilities 10C.14.1 7 G (1) Under section 62A of the Act, a firm should provide the FCA with a revised statement of responsibilities if there has been any significant change in the responsibilities of an FCA-approved SMF manager. [deleted] (2) Details can be found in SUP 10C.11 (Statements of responsibilities). Notifications about fitness, disciplinary action and breaches of COCON 10C.14.1 8 R (1) If a firm becomes aware of information which would reasonably be material to the assessment of the fitness and propriety of an FCAapproved SMF manager FCA-approved or notified SMF manager, or of a candidate to be one (see FIT), it must inform the FCA either:
(a) on Form D in accordance with SUP 10C.15 (Notifications and how to submit them to the FCA); or (b) if it is more practical to do so and with the prior agreement of the FCA, by email or fax; as soon as practicable and, in any case, within seven business days. (2) This rule does not apply to anything required to be notified under SUP 10C.14.5R (Form C) or SUP 10C.14.7R (Qualified Form C). (3) A notification under this rule must include details about the information referred to in (1) and the effect on the firm’s assessment of the fitness and propriety of the FCA-approved or notified SMF manager. If the notification is being submitted under (1)(a), it must also contain the information required by SUP 10C.15.15R (Standard information for all notifications).

FCA 202X/YY
10C.14.1
9
G SUP 10C.15 (Forms and other documents Notifications and how to submit them to the FCA) applies to the submission of Form D a notification under SUP 10C.14.18R. … 10C.14.2 1 G The FIT is relevant to the duty to notify in SUP 10C.14.18R extends to any circumstances that would normally be declared when giving the information required for section 5 of Form A or matters considered in FIT 2 as it contains material about the factors to take into account when assessing the fitness and propriety of an FCA-approved or notified SMF manager. 10C.14.2 2 R If a firm is required to notify the FCA about an FCA-approved SMF manager FCA-approved or notified SMF manager under any of the following:
(1) section 63(2A) of the Act (Duty to notify regulator of grounds for withdrawal of approval or invalidation of SMF notification); or … (3) section 64C of the Act (Requirement for authorised persons to notify regulator of disciplinary action) SUP 15.11 (Notification of COCON breaches and disciplinary action); it must give that notification:
(4) under SUP 10C.14.5R (Form C) if that rule applies; (5) under SUP 10C.14.7R (Qualified Form C) if that rule applies; or [deleted] (6) (in any other case if (4) does not apply) in accordance with under SUP 10C.14.18R (Form D) if that rule applies; or (7) (in any other case) in accordance with this rule, and in accordance with the requirements of this chapter about submission of those forms such notifications. 10C.14.2 3 G (1) The table in SUP 10C.14.24G summarises what the relevant parts of the sections section of the Act and the Handbook listed in SUP 10C.14.22R say. (2) SUP 15.11 sets out what a notification under SUP 10C.14.22R(3) should contain.

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(3) Any other notification under this rule should include, in addition to the information required by SUP 10C.15.15R (Standard information for all notifications), reasonable details about the matter being notified. 10C.14.2 4 G Table: Explanation of the sections section of the Act and Handbook mentioned in SUP 10C.14.22R
Section Summary of
relevant parts
Other
Handbook material
Comments
Section 63(2A)
(Duty to notify regulator of grounds for withdrawal of approval or invalidation of notification) At least once a year, each firm must, in relation to every SMF manager for whom an approval has been given on the application of, or in respect of whom an SMF notification has been given by, that firm:
(a) consider whether there are any grounds on which the FCA could withdraw the approval or invalidate the notification; and (b) if the firm is of the opinion that there are such grounds, notify the FCA of those grounds. FIT sets out guidance on the factors a firm should take into account when assessing the fitness and propriety of an approved person approved or notified person.
Section 64C of the
Act (Requirement for authorised persons to notify If:
(a) a firm takes disciplinary
SUP 15.11
(Notification of COCON breaches and
An example of when a notification should be made using Form C under

FCA 202X/YY regulator of disciplinary action) SUP 15.11 (Notification of COCON breaches and disciplinary action) action in relation to an SMF manager; and (b) the reason, or one of the reasons, for taking that action is a reason specified in SUP 15.11.6R breach of COCON; the firm should notify the FCA of that fact. disciplinary action) SUP 10C.14.5R rather than Form D under SUP 10C.14.18R or SUP 10C.14.22R is when a firm is required to notify the FCA under section 64C of the Act SUP
15.11 that it has
dismissed an SMF manager.
…
The need for complete and accurate information 10C.14 .26 G (1) The obligations to supply information to the FCA under:
(a) SUP 10C; or
(b) the sections part of the Act listed in SUP 10C.14.22R; … … … Application of this section to PRA-approved or notified persons 10C.14 .28 R This section also applies to a notification to the FCA about a PRA-approved SMF manager PRA-approved or notified SMF manager who is not an FCAapproved SMF manager FCA-approved or notified SMF manager required by any of the provisions provision of the Act listed in SUP 10C.14.22R. … 10C.14 .30 G If a firm is required to notify the FCA about a PRA-approved SMF manager PRA-approved or notified SMF manager who is not an FCA-approved SMF manager FCA-approved or notified SMF manager under one of the sections provision of the Act referred to in SUP 10C.14.28R, it should make a single

FCA 202X/YY notification under the PRA’s requirements. There is no need for a separate notification to the FCA. 10C.15 Forms and other documents Notifications and how to submit them to the FCA Purpose 10C.15. 1 G The purpose of this section is to:
(1) summarise the main forms and other documents used in notifications required by this chapter; and (2) explain how they should be submitted to the FCA. 10C.15. 1A G This section does not cover the forms for applying for approvals, making SMF notifications or applying for variations of approvals or SMF notifications. Instead, they can be found in the section of the FCA’s website covering SMCR applications and notifications. Forms and documents 10C.15. 2 G The main forms and other documents used in notifications required by this
chapter are listed in SUP 10C.15.3G.
10C.15.
3
G Table: FCA approved persons forms and other documents senior manager notifications Form or other document Purpose Handbook requirement Comments The relevant Form A SUP 10C
Annex 3D
Application to perform designated senior management functions SUP 10C.10.8D Form B (1) SUP 10C
Annex 4R
Notice to withdraw an application to perform controlled functions under the senior managers regime SUP 10C.10.36R

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Notice to withdraw an application to vary an approval under the senior managers regime SUP 10C.13.15R (2) Notice to withdraw an SMF notification under the senior managers regime SUP 10C.10A.11R (3) Notice to withdraw an application to vary a conditional approval or SMF notification under the senior managers regime SUP 10C.13.15R Form C (4) SUP 10C
Annex 5R
Notice of ceasing to perform controlled functions SUP 10C.14.5R (5) Notification of absence SUP 10C.14.5ER (6) Notice of qualified notification SUP 10C.14.7R The requirements in this section do not apply to a notification referred to in this row. Form D (7) SUP 10C
Annex 6R
Notification of changes in personal information or application details or functions SUP 10C.14.13R SUP 10C.14.15R Notification about fitness or of breach of conduct rules SUP 10C.14.18R SUP 10C.14.22R

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(8) Notification of changes in arrangements or functions SUP 10C.14.15R (9) Notification about fitness SUP 10C.14.18R The requirements in this section (except SUP 10C.15.15R (Standard information for all notifications) ) do not apply to a notification under SUP 10C.14.18R( 1)(b) (10) Notification about grounds for withdrawal or invalidation SUP 10C.14.22R( 1) (11) Notification about conduct rules breach SUP 10C.14.22R( 3) Form E SUP 10C
Annex 7D
Internal transfer of an approved person
SUP
10C.10.9D
Form I SUP 10C
Annex 8D
Application to vary a conditional approval SUP 10C.13.6D Form J SUP 10C
Annex 9D
Notification of significant change to a statement of responsibilities SUP 10C.11 Relevant statemen t of responsi bilities SUP 10C
Annex 10D
SUP 10C.11

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MiFID
Article 4
SMR
Informati on Form
SUP 10C
Annex 11D
SUP
10C.10.9BD
Annex
III template https://www
.fca.org.uk/ publication/ forms/mifid
-changesmanagemen t-bodyform.docx
As required by the MiFID authorisation and management body change notification ITS SUP 10C.10.9AG and SUP 10C.14.6AG [Note: Some of these forms are also used for the purposes of SUP 10A (FCA Approved Persons in Appointed Representatives)] [Editor’s note: As well as the deletions in the table in SUP 10C.15.3G shown above, the table is reduced from 5 to 4 columns as shown.] 10C.15.4 G SUP 10C Annex 2G gives examples of the circumstances in which the documents in SUP 10C.15.3G should be used. [deleted] 10C.15.5 G Copies of the forms in SUP 10C.15.3G and of the statement of responsibilities may be obtained from the FCA website. Credit unions can obtain copies from the FCA’s Supervision Hub. [deleted] 10C.15.6 G To contact the FCA’s Supervision Hub for approved persons enquiries:
[deleted]
(1) telephone: 0300 500 0597;
(2) email: firm.queries@fca.org.uk; or
(3) [deleted]
(4) write to:
Supervision Hub
The Financial Conduct Authority
12 Endeavour Square

FCA 202X/YY
London, E20 1JN.
How to make applications and give notifications 10C.15.7 D R (1) A firm other than firm in (2) must submit a document notification in column 1 of the table in SUP 10C.15.10R, in accordance with the corresponding requirement in column two of that table. (2) A:
(a) credit union; or
(b) a firm whose Part 4A permission covers only credit-related regulated activities; must submit a document notification in column 1 of the table in SUP 10C.15.10R, in accordance with the corresponding requirement in column three of that table. (3) This direction applies to the forms and other documents listed in the
table in SUP 10C.15.10R that are submitted under a direction.
[deleted]
10C.15.8 R SUP 10C.15.7D also applies to the forms and other documents listed in the
table in SUP 10C.15.10R that are submitted under a rule. [deleted]
10C.15.9 G It is up to the firm referred to in SUP 10C.15.7D(2) SUP 10C.15.7R(2) concerned to decide which of the methods of submission available to it under SUP 10C.15.10R it is going to use. 10C.15.1 0 R Table: Method of submission Form or other document Row of table in SUP 10C.15.3G where described Firms that are not credit unions or consumer credit firms (SUP 10C.15.7D(1)) Credit unions and consumer credit firms (SUP 10C.15.7D(2) The relevant Form A SUP 10C.15.11R SUP 10C.15.11R or SUP 10C.15.14R Form B Rows (1), (2) and (3) (withdrawal of SUP 10C.15.14R SUP 10C.15.14R

FCA 202X/YY application or notification) Form C Row (4) (Notice of ceasing to perform controlled functions) SUP 10C.15.11R SUP 10C.15.11R or SUP 10C.15.14R Form D Rows (5) and (7) to (11) (notifications about changes, fitness and conduct rules breaches) SUP 10C.15.11R SUP 10C.15.11R or SUP 10C.15.14R Form E SUP 10C.15.11R SUP 10C.15.11R or SUP 10C.15.14R Form I SUP 10C.15.11R SUP 10C.15.11R or SUP 10C.15.14R Form J SUP 10C.15.11R SUP 10C.15.11R or SUP 10C.15.14R Relevant statement of responsibilities In accordance with the requirements for the form with which it is submitted In accordance with the requirements for the form with which it is submitted MiFID Article 4 SMR Information Form Submit at the same time as Form A and/or E Not applicable
Annex II or III template Submit at the same time
as Form A, C and/or E
Not applicable
Method of submission: electronic submission 10C.15.1 1 R (1) An application or submission by a firm made under this rule must be made by submitting the form or document online at fca.org.uk using the FCA’s and PRA’s online notification and application system electronically in a standard format provided by the FCA. (2) A firm must use the version of the form or document made available on the electronic system referred to in (1). If the form or document is included in an Annex to this chapter, that electronic version is

FCA 202X/YY based on the version found in the applicable Annex to this chapter (which are listed in SUP 10C.15.3G). [deleted] (3) If the information technology systems used by the FCA fail and online electronic submission is unavailable for 24 hours or more, SUP 10C.15.14R applies until such time as facilities for online submission are restored. … Method of submission: other forms of submission 10C.15.1 4 R … (2) If the form or document is included in an Annex to this chapter, a A firm must use the version of the form or document found in the applicable Annex to this chapter (which are listed in SUP 10C.15.3G) make the notification using the standard format provided by the FCA. Standard information for all notifications 10C.15.1 5 R Any notification to which the requirements in this section apply must include the following in addition to the requirements specified elsewhere in this chapter:
(1) the name of the firm submitting the notification and its reference number; (2) the name of the person submitting the form on behalf of the firm and of a person appointed by the firm as a contact point for the FCA in relation to the notice; (3) contact details of the persons in (2); (4) the name of the candidate or of the SMF manager to which the notification relates; (5) other information that will enable the FCA to identify the persons in (2) and (4); and (6) any other information the firm would reasonably be expected to provide to the FCA in relation to the notice in question. 10C.15.1 6 G The information in SUP 10C.15.15R(5) may include the person’s Individual Reference Number (IRN), if applicable.

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…
10C
Annex 1
What functions apply to what type of firm
Part One: Introduction
10C
Annex 1
1.1
R This annex sets out:
(1) which FCA controlled function applies FCA-designated senior management functions apply to which type of SMCR firm.; and (2) which of those FCA-designated senior management functions are subject to the SMF notification procedure and for which kind of firm. … 10C
Annex 1
1.4
R In the tables in this annex:
(1) √ means that the FCA controlled function FCA-designated senior management function applies; and (2) × means that the FCA controlled function FCA-designated senior management functions does not apply.; and (3) ‘Notification’ means that the SMF notification procedure applies to the FCA-designated senior management function in question. …
Part Three: Functions applying to banking sector firms
…
10C
Annex 1
3.2
R Table: Controlled functions applying to banking firms (1) Brief description of function (2) Function number (3) UK firm (4) EEA firm (5) Overseas firm

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Governing functions
…
Chair of the nomination committee function SMF 13 √ Notification × × … Required functions … Other overall responsibility function SMF 18 √ × × Other local responsibility function SMF 22 × × √ …
Part Four: Functions applying to insurance sector firms
…
10C
Annex 1
4.3
R Table: Controlled functions applying to insurance sector firms (1) Brief description of function (2) Function number (3) Solvency II and large NDF (4) EEA branches (5) Overseas branches (6) Small NDF and other (7) ISPV Governing functions … Chair of the nomination committee function SMF 13 √ Notification × × × ×

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Chair of the with-profits committee function SMF 15 √ Notification × √ Notification × × … Required functions … Other overall responsibility function SMF 18 √ × × × × Other local responsibility function SMF 22 × × √ × × … …
Part Six: Functions applying to enhanced scope firms
…
10C
Annex 1
6.2
R Table: Controlled functions applying to enhanced scope SMCR firms Brief description of function Function number and whether SMF notification procedure applies Governing functions … Chair of the risk committee function SMF 10 Notification Chair of the audit committee function SMF 11 Notification

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Chair of the remuneration committee function SMF 12 Notification Chair of the nomination committee function SMF 13 Notification Senior independent director function SMF 14 Notification … Required functions … Other overall responsibility function SMF 18 Systems and controls functions … Head of internal audit function SMF 5 Notification …
Part Seven: Functions applying to limited scope firms
7.1 R Limited scope SMCR firms are divided into the following categories for the
purposes of SUP 10C Annex 1:
…
(5) a sole trader who does not come within (1) to (4A), (8) or (9) (10); (6) an authorised professional firm that does not come within (1) to (4A), (8) or (9) (10); … … The following annexes are deleted in their entirety:
(1) SUP 10C Annex 2G (Summary of forms and their use in the senior managers regime);

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(2) SUP 10C Annex 3D (Form A: Application to perform senior management functions); (3) SUP 10C Annex 4R (Form B: Notice to withdraw an application to perform controlled functions (including senior management functions)); (4) SUP 10C Annex 5R (Form C: Notice of ceasing to perform controlled functions including senior management functions); (5) SUP 10C Annex 6R (Form D: Notification: Changes to personal information/application details and conduct breaches/disciplinary action related to conduct); (6) SUP 10C Annex 7D (Form E: Internal transfer of a person performing a controlled function); (7) SUP 10C Annex 8D (Form I: Application to add, vary or remove a conditional approval for the performance of a senior management function); (8) SUP 10C Annex 9D (Form J: Notification of significant changes in responsibilities of a person performing a senior management function); (9) SUP 10C Annex 10D (Statement of responsibilities); and (10) SUP 10C Annex 11D (MiFID Article 4 SMR Information Form). The deleted text is not shown but the annexes are marked ‘[deleted]’ as shown below. 10C
Annex
2G
Summary of forms and their use in the senior managers regime [deleted] 10C
Annex
3D
Form A: Application to perform senior management functions [deleted] 10C
Annex
4R
Form B: Notice to withdraw an application to perform controlled functions (including senior management functions) [deleted] 10C
Annex
5R
Form C: Notice of ceasing to perform controlled functions including senior management functions [deleted] 10C
Annex
6R
Form D: Notification: Changes to personal information/application details and conduct breaches/disciplinary action related to conduct [deleted] 10C
Annex
7D
Form E: Internal transfer of a person performing a controlled function [deleted] 10C
Annex
8D
Form I: Application to add, vary or remove a conditional approval for the performance of a senior management function [deleted]

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10C
Annex
9D
Form J: Notification of significant changes in responsibilities of a person performing a senior management function [deleted] 10C
Annex
10D
Statement of responsibilities [deleted]
10C
Annex
11D
MiFID Article 4 SMR Information Form [deleted] Amend the following as shown. 15 Notifications to the FCA …
15.2 Purpose
…
15.2.5 G SUP 15.11 (Notification of COCON breaches and disciplinary action)
provides rules and guidance on notifications to the FCA by an SMCR firm where the SMCR firm takes disciplinary action in relation to any conduct rules staff and the reason for taking that action is a reason specified in rules made by the FCA related to a breach of the rules in COCON. This is a requirement imposed under section 64C of the Act. …
15.3 General notification requirements
…
Breaches of rules and other requirements in or under the Act or the CCA
15.3.11 R (1) A firm must notify the FCA of:
… by (or as regards (c) against) the firm or any of its directors, officers, employees, approved persons approved or notified persons, or appointed representatives or, where applicable, tied agents. …

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…
Breaches of rules and other requirements in or under the Act or the CCA 15.3.14A G (1) Some matters that need to be notified under SUP 15.3.11R may also have to be notified under SUP 10A.14 or SUP 10C.14 (Changes to an FCA-approved person’s FCA-approved or notified persons’ details). … (3) Any notification required under both SUP 10C.14 and SUP 15.3.11R should be made in accordance with SUP 10C.14, which requires notification using Forms C or D. … 15.3.14B G (1) Some matters that need to be notified under SUP 15.3.11R may also have to be notified under SUP 15.11 (Notification of COCON breaches and disciplinary action). This is explained in SUP 15.11.18DG. (2) If the same thing has to be notified under SUP 15.11 and SUP 15.3.11R, a firm should make separate notifications under both. This is because: [deleted] (a) notification under SUP 15.11 is annual and notification under SUP 15.3.11R is immediate; and (b) the details of what has to be notified under those requirements are different. … Lloyd’s of London
15.3.22 D SUP 15.3.23D to SUP 15.3.25D are given in relation to the exercise of the
powers of the Society and of the Council generally, with a view to achieving the objective of enabling the FCA to:
…
(2) determine whether underwriting agents, or approved persons approved or notified persons acting for them or on their behalf, are complying with the requirements imposed on them by or under the Act;

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(3) enforce the provisions of the Act, or requirements made under the Act, by enabling the FCA to consider, where appropriate, whether it should use its powers, for example, to:
…
(b) withdraw approval from an approved person of, or invalidate an SMF notification relating to, an approved or notified person acting for or on behalf of an underwriting agent , under section 63 of the Act (Withdrawal of approval or invalidation of notification) (see ENFG 5); … (e) discipline an underwriting agent, or an approved person approved or notified person acting for it or on its behalf, for a breach of a requirement made under the Act, including the Principles, Statements of Principle and rules (see DEPP 6); …
15.3.23 D The Society must immediately inform the FCA in writing if it becomes aware
that any matter likely to be of material concern to the FCA may have arisen in relation to:
…
(3) approved persons approved or notified persons or individuals acting for or on behalf of underwriting agents. …
15.3.25 D The Society must inform the FCA if it commences investigations or
disciplinary proceedings which do not fall within the scope of SUP 15.3.24D but which:
(1) involve an underwriting agent, or an approved person approved or notified person who carries out controlled functions for it or on its behalf; or … UK AIFMs …

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15.3.27 G Changes that the FCA would expect to be notified of under SUP 15.3.26R
include:
…
(3) the appointment of any new senior personnel if the AIFM is not required to apply for the FCA’s approval or make an SMF notification for that appointment under section 59 of the Act. 15.3.27A R A full-scope UK AIFM must notify the FCA of material changes under SUP
15.3.26 R in the following manner:
…
(2) for changes of senior personnel whose appointment is not required to be approved by or notified to the FCA under section 59 of the Act, by using the form in SUP 15 Annex 6BR; and … … SUP 15.4 (Notified persons) is deleted in its entirety. The deleted text is not shown but the
section is marked ‘[deleted]’ as shown below.
15.4 Notified persons [deleted]
Amend the following as shown.
15.6 Inaccurate, false or misleading information
…
15.6.6A G SUP 15.11.13R(4) adjusts the time when, and how, an SMCR firm should make updates under SUP 15.6.4R about notifications under section 64C of the Act (Notification of disciplinary action against certain employees) required pursuant to SUP 15.11 (Notification of COCON breaches and disciplinary action). …
15.11 Notification of COCON breaches and disciplinary action
Reasons for making a notification to the FCA Application

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15.11.1 G
R
Under section 64A of the Act, the FCA may make rules about the conduct of approved persons and certain other persons who work for a firm. This
section applies to SMCR firms.
15.11.2 G COCON sets out rules under section 64A of the Act and guidance on those
rules for SMCR firms. There is no territorial limitation on the application of this section. … Main rule
15.11.4 G
R
Under section 64C of the Act, a A firm must notify the FCA if:
(1) it takes disciplinary action (as defined in SUP 15.11.5R) against certain people working for an SMCR firm a member of the firm’s conduct rules staff; and (2) the reason, or one of the reasons, for taking this that action is a reason specified in rules made by the FCA (those rules are set out in SUP 15.11.6R) also amounts to a breach of COCON.
15.11.5 G
R
(1) Disciplinary action against a person is defined in section 64C of the Act as in relation to an SMF manager or other senior conduct rules staff member means, for the purpose of this section:
(a) the issuing issuing of a formal written warning,; (b) the suspension suspending or dismissal of dismissing that person; or (c) the reduction reducing or recovery of recovering any of such person’s remuneration. (2) Disciplinary action in relation to any other member of the firm’s conduct rules staff means, for the purpose of this section:
(a) issuing a final written warning; or
(b) dismissing that person.
(3) If a firm takes disciplinary action in accordance with (2) and if the firm’s disciplinary policy provides for an internal appeals process that applies in the case in question, it must not report that disciplinary action under this section:

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(a) during any period provided for by that policy within which the member of the firm’s conduct rules staff may start the appeal, unless there are reasonable grounds for the firm to conclude that it is unlikely that the member of the firm’s conduct rules staff will appeal under that policy within that period; and (b) if and so long as the internal appeals process is in progress in relation to that disciplinary action. (4) The extended meaning of disciplinary action in the row of Section 2 (Section Two: Supplementary requirements) of SYSC 22 Annex 1.2R (Template for regulatory references given by SMCR firms and disclosure requirements) titled ‘Questions (E) and (F)’ also applies for the purpose of this section. Contents of notification
15.11.6 R If a reason for taking disciplinary action as referred to in section 64C of the
Act (Requirement for authorised persons to notify regulator of disciplinary action) is any action, failure to act or circumstance that amounts to a breach of COCON, then the SMCR firm is required to notify the FCA of the disciplinary action. A notification must include the following information:
(1) the name of the member of the firm’s conduct rules staff in question and other information that will enable the FCA to identify them (such as their Individual Reference Number (IRN), if applicable); (2) details about the conduct which formed the basis of the disciplinary action taken; (3) the COCON rules that were breached; (4) which of the types of disciplinary action referred to in SUP 15.11.5R were taken; (5) whether the firm is updating a previous or is making a new notification; (6) if the firm is updating a previous notification:
(a) details that will enable the FCA to identify that previous notification and the applicable part of that notification; and (b) the updated or new information; and

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(7) the information in SUP 10C.15.15R (Standard information for all notifications). Explanation of when this section applies 15.11.6A G The effect of section 64C of the Act and SUP 15.11.6R is that the The reporting obligation in section 64C of the Act and in this section:
…
15.11.6B G (1) A further effect of section 64C of the Act and SUP 15.11.6R is that the The reporting obligation in section 64C of the Act and in this
section only applies if all the following conditions are met:
…
(b) the firm takes disciplinary action against that member of the kind in SUP 15.11.5G SUP 15.11.5R; and … (2) The result of (1)(a) and (c) is that if a firm takes disciplinary action against a member of the firm’s conduct rules staff, that does not automatically result in an obligation to report to the FCA under this
section or section 64C of the Act. For example, the misconduct by
the member of the firm’s conduct rules staff may be outside the scope of COCON. (3) The result of (1)(b) is that a firm only has to report a breach of COCON to the FCA under section 64C of the Act this section if the firm takes disciplinary action of the specified kind. (4) A firm need not determine whether conduct by a member of its conduct rules staff breaches a rule in COCON unless it takes disciplinary action against that member of a kind in SUP 15.11.5R. (5) Therefore, if a firm takes disciplinary action against a member of its conduct rules staff of a kind falling outside SUP 15.11.5R, it does not need to determine whether the misconduct was a breach of COCON. (6) Paragraphs (4) and (5) only apply to reporting under this section. For example, a firm may have to report misconduct under SUP 15.3.11R (Breaches of rules and other requirements in or under the Act or the CCA) even if it does not take disciplinary action of the kind in SUP 15.11.5R or has not decided whether or not to take such action.

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15.11.6C G (1) A firm may have to report a breach of COCON under Principle 11 or SUP 15.3.11R (Breaches of rules and other requirements in or under the Act or the CCA) even though it does not have to report the breach under section 64C of the Act or this section. [deleted] (2) For example, a firm may notify the FCA of a suspected serious breach of COCON before it has completed its investigation. 15.11.6D G On the other hand, a breach of COCON may have to be reported to the FCA under section 64C of the Act even if it is not significant for the purposes of SUP 15.3.11R or if it is not serious enough to be reported under Principle
11. [deleted]
Types of disciplinary action
15.11.6E G Disciplinary action potentially comes within this section 64C of the Act even if the disciplinary proceedings do not expressly refer to a breach of COCON. What matters is whether the alleged facts on which the disciplinary action is based also amount to a breach of COCON. 15.11.6F G (1) One of the types of disciplinary action in section 64C of the Act (and therefore coming within the scope of the reporting obligation in this section) as respects a senior conduct rules staff member is the suspension of the employee concerned that person. … (3) If an employee a senior conduct rules staff member is suspended for the reason in (2), there will be no reporting obligation under this
section 64C of the Act. That is because the reason for the action will
not be a breach of COCON but instead the need to investigate misconduct. This is the case even if the misconduct for which the employee senior conduct rules staff member is being investigated would be a breach of COCON. (4) If, after the investigation is completed, the firm takes disciplinary action of a kind in SUP 15.11.5G SUP 15.11.5R for misconduct of a kind that breaches COCON, the firm should report it under this
section 64C of the Act.
15.11.6G G (1) Another of the types of disciplinary action in this section 64C of the Act as respects a senior conduct rules staff member is the reduction or recovery of any of the remuneration of the employee concerned that person. (2) However, the firm should not report such reduction or recovery under this section 64C of the Act if that action was taken for a

FCA 202X/YY reason that is not misconduct of a kind that breaches COCON. For example, there may be no COCON breach because:
(a) the action was taken because the individual has breached a requirement of the firm that does not amount to a breach of COCON because, for example, it is outside the scope of COCON 1.1.7AR COCON 1A.6.1R (To what conduct does it apply? (Other limitations: Non-banks)); … Reasons for making a notification to the FCA
15.11.7 G A firm should make a separate notification about a person under this section
64C of the Act where: [deleted]
(1) it has made a notification to the FCA about the person pursuant to SUP 15.3.11R(1)(a) because of a breach of COCON; and (2) it subsequently takes disciplinary action against the person for the action, failure to act, or circumstance, that amounted to a breach of COCON. Revising a notification
15.11.8 G If, after a firm has made a notification for a person (A) pursuant to this
section 64C of the Act, it becomes aware of facts or matters which cause it to
change its view that A has breached COCON, or cause it to determine that A has breached a provision of COCON other than the provision to which the notification related, the firm should inform the FCA of those facts and matters and its revised conclusion in line with a firm’s obligation to comply with Principle 11, SUP 15.6.4R and, if applicable, SUP 10C or SUP 15.11.13R(4). Appeals 15.11.8A G (1) This paragraph covers the effect of an appeals process as referred to in SUP 15.11.5R(3). (2) If the member of the firm’s conduct rules staff appeals against disciplinary action but that disciplinary action is not withdrawn or suspended pending the outcome of the appeal, the firm should not report that disciplinary action until the firm’s internal appeals process has been completed. Equally, the firm should not report disciplinary action if it suspends the action pending the outcome of the appeal.

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(3) If the firm takes disciplinary action and the member of the conduct rules staff has a right to appeal and has not yet done so, the firm should not report it. (4) If, after the appeal process is completed, the firm takes or does not withdraw the disciplinary action, the firm should report it under this
section.
(5) If, after the appeal process is completed, the firm withdraws the disciplinary action, the firm should not report the original disciplinary action under this section. (6) If the outcome of the disciplinary process is that the disciplinary action is maintained but the firm finds that the conduct concerned did not breach COCON, the firm should not report the disciplinary action under this section. (7) A firm’s appeal process includes any internal second or further appeal or review. It does not include any court or tribunal proceedings. (8) The 14-month reporting deadline in SUP 15.11.13R (Timing and form of notifications: conduct rules staff other than SMF managers) runs from the date that the disciplinary action is taken, not from the date that any appeal process is concluded but, notwithstanding that, the reporting deadline does not expire before the conclusion of the disciplinary process.
15.11.9 G (1) If SUP 15.11.5R(3) does not apply in relation to a senior conduct
rules staff member. Therefore, if a firm takes disciplinary action as a result of a conduct breach (see SUP 15.11.6R) against an employee a senior conduct rules staff member but the employee senior conduct rules staff member has appealed or plans to appeal, the firm should still report the disciplinary action under section 64C of the Act but should include the appeal in the notification. (2) …
15.11.11 G In relation to any conduct rules staff, the FCA does not expect a firm to
notify it pursuant to section 64C of the Act if the breach of COCON occurred before the application of COCON to that firm. [deleted] Timing and form of notifications: SMF managers
15.11.12 G
R
Where a firm is required to notify the FCA pursuant to section 64C of the Act under this section and that notification relates to an SMF manager, SUP 10C

FCA 202X/YY sets out how and when the notification must be made, and the relevant notification rules in SUP 10C apply. Timing and form of notifications: senior conduct rules staff other than SMF managers 15.11.12 A R (1) This rule applies to a notification in relation to a senior conduct rules staff member who is not an SMF manager. (2) The reporting rules in this section do not apply where the breach of COCON referred to in SUP 15.11.6R is of one of the rules in COCON 2.2 (Senior manager conduct rules). That notification must be made within 7 business days of the disciplinary action. (3) Subject to (2), SUP 15.11.13R to SUP 15.11.15R apply to a notification in relation to a senior conduct rules staff member in (1). [deleted] 15.11.12 B G (1) This provision explains how breaches of COCON of a person in SUP 15.11.12AR should be reported. [deleted] (2) SUP 15.11.12AR applies to any of the following who is not an SMF manager:
(a) an employee of an SMCR firm who performs the function of an SMF manager (see row (2) of the table in COCON 1.1.2R); (b) a board director of a UK SMCR firm (see row (8) of the
table in COCON 1.1.2R); and
(c) a person appointed under SUP 10C.3A.6R (The 12-week rule: The main rules) or the PRA equivalent (see rows (3) and (9) of the table in COCON 1.1.2R). (3) If:
(a) a person in (1) breaches a rule in COCON 2.2; (b) the firm takes disciplinary action against that person of the kind in SUP 15.11.5G; and (c) the action, failure to act or circumstance that is the basis of the disciplinary action in (b) also amounts to the breach of COCON in (a), the firm should notify the FCA of that immediately.

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(4) The reason for (3) is that a breach of COCON 2.2 by a senior conduct rules staff member that results in disciplinary action of the kind in SUP 15.11.5G is significant for the purposes of SUP 15.3.11R(1) (Breaches of rules and other requirements in or under the Act or the CCA). That rule says that a firm should immediately notify the FCA of a significant breach of a COCON rule. (5) The effect of SUP 15.3.11R(1) is also that if:
(a) a person in (1) breaches COCON;
(b) either of the following apply:
(i) the firm does not take (or has not yet taken) disciplinary action against that person of the kind in SUP 15.11.5G; or (ii) the breach is of a rule in COCON 2.1 (Individual conduct rules); and (c) the breach is significant, the firm should also immediately notify the FCA of that breach. (6) The effect of this section and section 64 of the Act is that if:
(a) a person in (1) breaches one of the rules in COCON 2.1 (Individual conduct rules); (b) the firm takes disciplinary action against that person of the kind in SUP 15.11.5G; and (c) the action, failure to act or circumstance that is the basis of the disciplinary action in (b) also amounts to the breach of COCON in (a), the firm should notify it under SUP 15.11.12AR, even if it has already notified it under (5). (7) Paragraph (6) does not apply to a breach of one of the rules in COCON 2.2. Paragraph (3) applies instead. Timing and form of notifications: conduct rules staff other than SMF managers senior conduct rules staff members
15.11.13 R (1) A firm must make any notifications required pursuant to this section
64C of the Act relating to conduct rules staff other than SMF managers a senior conduct rules staff member in accordance with

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SUP 15.11.13R to SUP 15.11.15R. This is subject to SUP 15.11.12AR (Timing and form of notifications: senior conduct rules staff other than SMF managers). (2) That notification must be made annually within 14 months of the disciplinary action. (3) Each notification must: [deleted] (a) cover; (i) (in the case of a firm falling within SYSC 23 Annex 1 6.7R (credit firms with limited permission)) the 12 month period ending on the last day of December; or (ii) (for any other firm) the 12 month period ending on the last day of August; and (b) be submitted to the FCA:
(i) within two months of the end of the reporting period in (a)(i) or (a)(ii); or (ii) (if the end of the submission period in (b)(i) falls on a day which is not a business day) so as to be received no later than the first business day after the end of that submission period. (4) SUP 15.6.4R and SUP 15.6.5R (updates to a notification that is or has become incorrect) apply to a notification under this rule but the firm must include make the update or correction in the next notification it is due to make under this rule within 14 months of the occurrence of the event or circumstance that gives rise to the obligation to update rather than in the time and manner otherwise required for notifications under those rules. … (6) (3)(a)(i) applies whether or not the firm is a limited scope SMCR firm. [deleted] … 15.11.13 B G If a firm has nothing to report under section 64C of the Act or SUP 15.11.13R(4) for a particular reporting period, there is no requirement to make a nil return and so the firm should not send a notification for that period. [deleted]

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Timing and form of notifications: conduct rules staff other than SMF managers Method of notification
15.11.14 R (1) A firm other than a credit union must make each notification
pursuant to SUP 15.11.13R (notifications about section 64C of the Act relating to conduct rules staff other than SMF managers Timing and form of notifications: conduct rules staff other than senior conduct rules staff members) by submitting it online through the FCA’s website using the electronic system made available by the FCA for this purpose electronically in a standard format provided by the FCA. (2) A firm must use the version of Form H (named REP008 – Notification of Disciplinary Action) made available on the electronic system referred to in (1), which is based on the version found in SUP 15 Annex 7R make each notification pursuant to SUP 15.11.12AR (Timing and form of notifications: senior conduct rules staff other than SMF managers) in accordance with SUP 15.7 (Form and method of notification) but it may only use notification method 6 (Online submission via the FCA’s website) in SUP 15.7.5AR (Methods of notification). … …
15.11.15 R A credit union Where this rule applies, a firm must make each notification
pursuant to SUP 15.11.13R (notifications about section 64C of the Act relating to conduct rules staff other than SMF managers) in accordance with the rules and guidance in SUP 15.7, using Form H as set out in SUP 15
Annex 7R any standard format provided by the FCA.
15.11.15
A
R …
Freedom of firm to set its own reporting cycle 15.11.15 B G (1) SUP 15.11.13R provides for a 14-month time limit for notifying so that, if a firm wishes, it can report disciplinary action annually in a single consolidated notification with a 2-month period for the firm to prepare the notification. (2) If a firm decides to report annually, the firm:
(a) chooses the start and end date of each annual period and may change that choice; and

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(b) need not inform the FCA what those periods are or whether it changes them. (3) If a firm chooses to report annually, it may also notify on another basis for some disciplinary actions. For example, if an appeal is in progress at the reporting date that the firm uses, it can choose to submit a notification of the finalised outcome at the conclusion of the process rather than include it in its next annual notification. (4) If a firm chooses to report annually, it may switch to another approach at any time. If it does, it does not need to inform the FCA. (5) If a firm chooses to report annually and it has nothing to report for a particular reporting period, there is no requirement to make a nil return and so the firm should not send a notification for that period. (6) A firm need not report on the annual basis in (1). For instance, a firm with few disciplinary actions to notify may decide that it is simpler to notify each disciplinary action when it occurs. General guidance on notifications of rule breaches and disciplinary action Reporting under other rules …
15.11.17 G The obligation to notify pursuant to this section 64C of the Act or to update
or correct a notification under SUP 15.11.13R(4) does not replace or limit a firm’s obligation to comply with Principle 11.
15.11.18 G When considering whether to make a notification pursuant to this section
64C of the Act, a firm should also consider whether a notification should be made under any notification rules, including, without limitation, any notification rules that require a notification to be made to the PRA. 15.11.18 A G (1) A firm may have to report a breach of COCON under Principle 11 or SUP 15.3.11R (Breaches of rules and other requirements in or under the Act or the CCA) even though it does not have to report the breach under this section. (2) For example, a firm may be required to notify the FCA of a suspected serious breach of COCON before it has completed its investigation. 15.11.18 B G On the other hand, a breach of COCON may have to be reported to the FCA under this section even if it is not significant for the purposes of SUP 15.3.11R or if it is not serious enough to be reported under Principle 11.

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15.11.18
C
G A firm should make a separate notification about a person under this section where:
(1) it has made a notification to the FCA about the person pursuant to SUP 15.3.11R(1)(a) because of a breach of COCON; and (2) it subsequently takes disciplinary action of the kind covered by this
section against the person for the action, failure to act or
circumstance that amounted to a breach of COCON.
15.11.18
D
G (1) Some matters that need to be notified under SUP 15.3.13R (Notification of COCON breaches and disciplinary action) may also have to be notified under this section. (2) A matter that has been reported under this section does not have to be notified again under SUP 15.3.13R. (3) However, if the same thing has to be notified under SUP 15.11.13R (Timing and form of notifications: conduct rules staff other than senior conduct rules staff members) and SUP 15.3.11R, in practice, a firm should make separate notifications under both. This is because:
(a) notification under SUP 15.3.11R should be immediate, whereas a firm has up to 14 months to report it under SUP 15.11.13R; and (b) even if it makes the notification under this section earlier, the notification under SUP 15.11.13R will be delayed if an appeals process is applicable. (4) If a notification contains the details in SUP 15.11.6R (Contents of notification), notification under one of SUP 15.3.13R and 15.11.12AR (Timing and form of notifications: senior conduct rules staff other than SMF managers) amounts to notification under the other. (5) SUP 15.3.14AG (Breaches of rules and other requirements in or under the Act or the CCA) deals with matters that have to be reported under both SUP 15.3.11R and SUP 15.11.12R (Timing and form of notifications: SMF managers). Confidentiality
15.11.19 G The obligations to make a notification pursuant to this section 64C of the Act
apply notwithstanding any agreement (for example a ‘COT 3’ Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS)) or

FCA 202X/YY any other arrangements entered into by a firm and an employee a member of its conduct rules staff upon termination of the employee’s that member’s employment. A firm should not enter into any such arrangements or agreements that could conflict with its obligations under this section. Miscellaneous
15.11.21 G …
15.11.22 G The FCA does not expect a firm to notify it under this section of any conduct
of a member of its conduct rules staff that would have breached COCON if it occurred when COCON did not apply in relation to that member because, for example, the firm was not an SMCR firm at the time. SUP 15.16 (Notification of changes in the management body) is deleted in its entirety. The deleted text is not shown but the section is marked ‘[deleted]’ as shown below.
15.16 Notification of changes in the management body [deleted]
The following annexes are deleted in their entirety:
(1) SUP 15 Ann 2 (Form F: Changes in notified persons); (2) SUP 15 Annex 7R (Form H: Form for the notification of disciplinary action relating to conduct rules staff (other than SMF managers) in SMCR firms); and (3) SUP 15 Annex 14R (Notification Procedures for Changes to the Management Body for Non-SMF Directors). The deleted text is not shown but the annexes are marked ‘[deleted]’ as shown below. 15 Ann 2 Form F: Changes in notified persons [deleted] … 15
Annex
7R
Form H: Form for the notification of disciplinary action relating to conduct rules staff (other than SMF managers) in SMCR firms [deleted] … 15
Annex
14R
Notification Procedures for Changes to the Management Body for Non-SMF Directors [deleted] Amend the following as shown.

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16 Reporting requirements
16.1 Application
…
16.1.1F R The rules and guidance in SUP 16.26 (Reporting of information about Directory persons) apply to an SMCR firm. [deleted] …
16.1.2 G …
(2) SUP 16.26 (Reporting of information about Directory persons) applies to a firm which is an SMCR firm (see SUP 16.1.1FR). [deleted] … … Application of different sections of SUP 16 (excluding SUP 16.13, SUP 16.14A, SUP 16.15, and SUP 16.22 and SUP 16.26)
16.1.3 R
…
Note 2 The application of SUP 16.13 is set out under SUP 16.13.1G; the application of SUP 16.15 is set out under SUP 16.15.1G; the application of SUP 16.16 is set out SUP 16.16.1R and SUP 16.16.2R; and the application of SUP 16.17 is set out in SUP 16.17.3R and SUP 16.17.4R; and the application of SUP 16.26 is set out in SUP 16.26.1R. … …
16.3 General provisions on reporting
…
Structure of the chapter
16.3.2 G This chapter has been split into the following sections, covering:

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…
(21) Directory persons information reporting (SUP 16.26); [deleted] … … SUP 16.26 (Reporting of information about Directory persons) is deleted in its entirety. The deleted text is not shown but the section is marked ‘[deleted]’ as shown below.
16.26 Reporting of information about Directory persons [deleted]
The following annexes are deleted in their entirety:
(1) SUP 16 Annex 47AR (Directory persons report); and (2) SUP 16 Annex 47BG (Guidance notes for Directory persons report in SUP 16 Annex 47AR). The deleted text is not shown but the annexes are marked ‘[deleted]’ as shown below. 16
Annex
47AR
Directory persons report [deleted]
16
Annex
47BG
Guidance notes for Directory persons report in SUP 16 Annex 47AR [deleted] Amend the following as shown. TP 1 Transitional provisions … TP 1.13 Reporting of information about Directory persons [deleted] (1) (2) Material to which the transitional provision applies (3) (4) Transitional provisions (5) Transitional provision:
dates in force
(6)
Handbook provision coming into force

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1 SUP 16.26 R (1) This rule applies to:
(a) an SMCR banking firm; and
(b) an SMCR insurance firm.
(2) The reporting and timing requirements in SUP 16.26 are modified in accordance with paragraphs (3) to (6) for a firm to which this rule applies. (3) The firm must submit a report about each individual who is or becomes a Directory person on or after 9 September 2019. (4) Where the relevant information is held by the firm, the firm must submit a report about each individual who does not fall within (3), but who would have been a Directory person on or after 10 December 2018. (5) The firm must submit to the FCA all reports about the Directory persons specified in (3) and (4) by 9 March 2020, which is set out in Part 1, SUP 16
Annex 47AR (Directory
persons report), submitted online through the appropriate system which is accessible from the FCA website and in the appropriate format. From 9 September 2019 to 9 March 2020 9 September 2019

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(6) SUP 16.26.13R to SUP
16.26.19R apply only on and from 9 March 2020.
2 SUP 16.26 R (1) This rule applies to an SMCR firm which is not:
(a) an SMCR banking firm; or
(b) an SMCR insurance firm.
(2) The reporting and timing requirements in SUP 16.26 are modified in accordance with paragraphs (3) to (5) for a firm to which this rule applies. (3) The firm must submit a report about each individual who is or becomes a Directory person on or after 9 December 2019. (4) The firm must submit to the FCA all reports about the Directory persons specified in (3) by 31 March 2021, which is set out in Part 1, SUP 16
Annex 47AR (Directory
persons report), submitted online through the appropriate system which is accessible from the FCA website and in the appropriate format. (5) SUP 16.26.13R to SUP 16.26.19R apply only on and from 31 March 2021. (6) This rule is modified by SUP TP 1.13.3R. From 9 December 2019 to 31 March 2021 9 December 2019

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(1)
(2)
Material to which the transitional provision applies (3) (4) Transitional provisions (5) Transitional provision:
dates in force
(6)
Handbook provision coming into force
3 SUP 16.26 R (1) This rule applies to a firm:
(a) that comes within SYSC
TP 8.1.1R (Application, purpose and definitions); and (b) has an individual transitional period. (2) SUP TP 1.13.2R is adjusted so that a reference to:
(a) 9 December 2019 is a reference to the start of a firm’s individual transitional period; and (b) 31 March 2021 is a reference to the end of a firm’s individual transitional period. (3) Individual transitional period has the meaning in SYSC TP 8.1.5R (Table:
glossary of bespoke terms used in SYSC TP 8), taking into account the amendment to that definition made by the Individual Accountability (FCAAuthorised Firms) (COVID19 and Extension of Deadlines) Instrument 2020. As stated in column (4) As stated in column (4)
Part 2: Comes into force on [date 2]

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TP 5 Miscellaneous transitional provisions for the SMCR and the approved persons regime: changes to SUP 10A, SUP 10C, SUP 15.11 and SUP 16.26 TP 5 …
5.3 …
TP 5.4: Changes in [2027]
TP 5.4.1 R SUP TP 5.4 relates to amendments to the Handbook made by the Individual Accountability (SMCR Review Phase 2) Instrument 2027 ([Editor’s note:
insert instrument reference number]).
TP 5.4.2 R In SUP TP 5.4, the ‘commencement date’ means [date 1]. Early notification TP 5.4.3 R A firm may make an SMF notification to the FCA before the commencement date if:
(1) it is received by the FCA no earlier than 1 month before the commencement date; and (2) the firm would be entitled to make an SMF notification to the FCA in respect of the designated senior management function concerned after the commencement date. TP 5.4.4 R (1) SUP 10C.10A.16R (When a notice takes effect), SUP 10C.10A.17R (When a notification is ineffective) and the other rules in the Handbook that will apply in respect of an SMF notification after the commencement date apply in respect of any notification made in accordance with SUP TP 5.4 even if they are otherwise not in force. (2) A reference in (1) to a rule refers to the version that takes into account the amendments to be made by the instrument referred to in SUP TP 5.4.1R. (3) ‘SMF notification’ has the meaning it has in the instrument referred to in SUP TP 5.4.1R. TP 5.4.5 G SUP TP 5.4.3R and SUP TP 5.4.4R mean that an SMF notification received before the commencement date takes effect only if it meets the following requirements:

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(1) the SMF notification is received no earlier than 1 month before commencement date; (2) the SMF notification specifies a date of appointment that is the later of:
(a) the commencement date; or
(b) a date within 3 months of the date on which the SMF notification is submitted; (3) the SMF notification complies with the requirements of SUP 10C.10A.17R as if it were in force at that time; (4) the SMF notification has not been withdrawn in accordance with SUP 10C.10A.11R to SUP 10C.10A.14G (Withdrawing a notification); and (5) the notification is not ineffective for any of the other reasons in SUP 10C.10A.18G. TP 5.4.6 G (1) This paragraph explains some of the other effects of SUP TP 5.4.3R and SUP TP 5.4.4R. (2) An SMF notification received before the commencement date which is not prevented from taking effect in accordance with SUP TP 5.4.5G takes effect on the later of:
(a) the date on which the FCA confirms submission of the SMF notification in writing; (b) the commencement date; or (c) the date of appointment specified in the SMF notification; but in any case no later than the day in SUP TP 5.4.5G(2)(b). (3) SYSC 22 (Regulatory references) applies to a firm asked to give a reference about an ex-employee in respect of whom another firm is proposing to give an SMF notification in accordance with SUP TP 5.4.3R as well as to the firm proposing to give the notification. (4) The prohibition in section 60(2ZA) (Application for approval) of the Act on applying for approval where an SMF notification is possible does not prevent a firm making an urgent approval application for an FCA-designated senior management function that will be subject to the SMF notification procedure after the commencement date as long as it specifies that the approval should take effect from the date

FCA 202X/YY it is granted or before the commencement date. This is because an SMF notification under SUP TP 5.4.3R and SUP TP 5.4.4R can only be made if the specified effective date is no earlier than the commencement date.
Part 3: Comes into force on [date 1]
18-week rule
TP 5.4.7 R The amendments to SUP 10C.3A apply in relation to any absence that begins after the commencement date. TP 5.4.8 G Time spent by a person as a temporary replacement under SUP 10C.3A before the commencement date counts towards the calculation of the amended time limits. In-flight applications TP 5.4.9 G SUP TP 5.4.9G to SUP TP 5.4.13G apply where:
(1) a firm has applied for approval for a person to perform an FCAdesignated senior management function; (2) that application has not been finally determined by the commencement date; and (3) that designated senior management function would otherwise be subject to the SMF notification procedure. TP 5.4.10 G ‘Finally determined’ has the meaning it has in SYSC 10C.3A.8R(3) (The 18- week rule: The main rules). TP 5.4.11 G The SMF notification procedure does not apply to the FCA-designated senior management function in SUP TP 5.4.9G in relation to that application and that firm. TP 5.4.12 G SUP TP 5.4.11G means that the FCA will continue to process that approval. The procedures and requirements for considering, withdrawing, granting and refusing an application for approval will continue to apply to that application. TP 5.4.13 G The reason for SUP TP 5.4.11G is that normally the approval procedure does not apply where the SMF notification procedure applies because
section 60(2ZA) of the Act (Applications for approval) says that a firm may
not make an application for approval where the SMF notification procedure applies. However, that prohibition does not apply where the application was made when section 60(2ZA) was not yet in force.

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Effect of pre-commencement approvals
TP
5.4.14
G An approval given by the FCA for an FCA-designated senior management function that has become subject to the SMF notification procedure remains in full force and effect following the commencement date. Abolition of controlled functions TP 5.4.15 G A firm does not have to notify the FCA that an SMF manager has ceased to perform the other overall responsibility or the other local responsibility FCA-designated senior management functions because those functions ceased to be FCA-designated senior management functions under the instrument referred to in SUP TP 5.4.1R. Amendment to the group entity senior manager function TP 5.4.16 G A firm should notify the FCA under SUP 10C.14.5R (Ceasing to perform an FCA-designated senior management function) that an SMF manager has ceased to perform the group entity senior manager function because of the amendments to the definition of that function by the instrument referred to in SUP TP 5.4.1R. Notification of disciplinary action TP 5.4.17 G The changes to SUP 15.11 (Notification of COCON breaches and disciplinary action) apply to disciplinary action or breaches of COCON that occur before the commencement date as well as after but they do not require re-notification of a notification that was made before the commencement date. TP 5.4.18 G The obligation of a firm to update a notification given before the commencement date still continues even if the firm would no longer be required to include the information in the original notification if the firm was considering whether to make the notification after the commencement date. … … TP 6 Financial Services (Banking Reform) Act 2013: Approved persons TP 6 Note to the reader

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6.1.1-
2
G (1) SUP TP 6 has not been amended to reflect changes in the FCA Handbook and Glossary since the beginning of 2018 (except for some changes to SUP TP 6.1.1-1G made in 2020, and editorial amendments made to reflect the deletion of certain Glossary terms). This is because it is made up of transitional provisions that mostly expired before then. (2) … (3) In SUP TP 6, unless otherwise specified, the following terms should be read as they had effect in the Handbook Glossary on 1 January 2021, subject to any modifications specified below:
(a) ‘approved person’, and where the context requires, references to approved person include approved or notified person; and (b) ‘current approved person approval’, and where the context requires, references to current approved person approval include current SMF approval or notification. 6.1.1- 1 G Table: Meaning of superseded Glossary terms … Purpose and application
6.1.1 G SUP TP 6 has transitional and grandfathering provisions relating to
the changes to the approved persons approved persons regime made by Part 4 of the Financial Services (Banking Reform) Act 2013. … Grandfathering of approved persons: mapping of old functions onto new
6.2.1 R A firm must not include any of the following approved persons
approved persons in a grandfathering notice:
(1) an approved person approved person whose approval is under SUP 10A.1.15R or SUP 10A.1.16R (appointed representatives) for that firm;

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(2) an approved person approved person whose approval is to perform an FCA controlled function not listed in column one of the table in SUP TP 6.2.7R for that firm; or (3) an approved person approved person if the firm has concluded that they will not be performing their potential new designated senior management function for the firm on the commencement date. …
6.2.2 G …
(3) An example of SUP TP 6.2.1R(3) is an approved person approved person who plans to resign before the commencement date. (4) If plans change, and the approved person approved person in (3) plans to carry on performing the function, the firm should update the grandfathering notice. (5) The electronic version of the notification form will include approved persons approved persons in SUP TP 6.2.1R(3). However, that does not mean that the firm has included them in its notification. The names are supplied by the system to help the firm reconcile its records with the regulators’ records and to help the firm check whether it has missed out someone it wants to include. (6) If:
(a) SUP TP 6.2.1R applies to some of an approved person’s approved person’s approvals or potential new designated senior management functions; but … (c) as a result, some of the approved person’s approved person’s existing functions are potentially grandfathered and some are not; then the notification should:
(d) include the approved person approved person; but …

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…
6.2.4 R If:
(1) the result of SUP TP 6.2.3R (together with the PRA Transitionals Rules and the Transitionals and Grandfathering Order) would be that an approved person approved person is deemed to be approved to perform:
…
(2) that approved person approved person is deemed by the Transitionals and Grandfathering Order (together with SUP TP 6 and the PRA Transitionals Rules) to be approved to perform any other designated senior management function for the same firm; then, for that approved person approved person and that firm, the other overall responsibility function or the other local responsibility function (whichever is applicable) is not treated as equivalent to the pre-commencement controlled function to which it would otherwise have been equivalent under SUP TP 6.2.3R. … … … …
6.3.5 D A notification under row (1) (first grandfathering notification for
approved persons approved persons) and row (4) (first grandfathering notification for candidates) of the table in SUP TP 6.3.3D should be made at the same time and on the same notification form. …
6.3.8 G If a firm gives a grandfathering notification for an approved person
approved person and that approved person leaves the firm or gives up performing some of their controlled functions, the firm should notify the appropriate regulator using Form C as well as under SUP TP 6. Grandfathering of approved persons: statements of responsibilities

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6.4.1 D A notification under the table in SUP TP 6.3.3D must be
accompanied by a statement of responsibilities for each approved person approved person or candidate covered by the notification. Grandfathering of approved persons: management responsibilities maps
6.5.1 D A notification under rows (1) and (4) of the table in SUP TP 6.3.3D
(first grandfathering notification for approved persons approved persons and candidates) must be accompanied by a management responsibilities map. …
6.9.4 G Table: Examples of how ongoing requirements apply to
grandfathered approvals
Requirement in SUP 10C Summary of the requirement in column (1) How SUP 10C applies … General Requirements referring to a current approved person approval current approved person approval (whether from the FCA or the PRA) … Requirements referring to a current approved person approval current approved person approval held within the last six months … … … potential grandfathered function (in relation to an approved person approved person and firm at a particular date) a pre-commencement controlled function:
… potential new designated senior
(in relation to an approved person approved person and firm) the new designated senior management function that is deemed to apply after the commencement date under the Transitionals and

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Grandfathering Order and is referred to in paragraph (2) of the definition of potential grandfathered function … … TP 7 Financial Services (Banking Reform) Act 2013: Approved persons in Solvency II firms TP 7 Note to the reader 7.1.- 1 G SUP TP 7 has not been amended since 7 March 2016, other than editorial amendments made to reflect the deletion of certain Glossary terms. In SUP TP 7, unless otherwise specified, the term ‘approved person’ should be read as it had effect in the Handbook Glossary on 7 March 2016, and where the context requires, references to approved person include approved or notified person. Purpose of SUP TP 7
7.1.1 G SUP TP 7 has transitional and grandfathering provisions relating to
the changes to the approved persons approved persons regime made by Part Four of the Financial Services (Banking Reform) Act 2013. The Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 (as amended):
…
7.1.2 R SUP TP 7 applies to:
…
(2) approved persons approved persons of Solvency II firms. … Grandfathering of approved persons: requirement to give notice and equivalence of old and new functions
7.2.1 R (1) A Solvency II firm is not required to give notice to the FCA for
the purposes of article 2(1) of the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order

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2015 in relation to any approved person approved person for whom the FCA granted a pre-implementation approval in relation to that firm and whose role will not change postimplementation. (2) The exception to (1) is approved persons approved persons:
…
…
…
7.3.3 D …
(5) For approved persons approved persons in firms which are carrying out PRA controlled function CF1 pre-implementation and who will continue to carry out FCA controlled function CF1 post-implementation (and no PRA controlled functions), and there are no other changes to the functions they carry out, notification and relevant information in relation to the FCA CF1 function is deemed to have been given to the FCA, unless the firm has submitted a Form C. … …
7.3.5 G If a firm gives a grandfathering notification for an approved person
approved person and that approved person approved person leaves the firm or gives up performing some of their controlled functions, the firm should notify the appropriate regulator using Form C as well as under SUP TP 7. … … TP 8 Financial Services (Banking Reform) Act 2013: Approved persons in small non-directive insurers TP 8 Note to the reader

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8.1.-
1
G SUP TP 8 has not been amended since 16 December 2015, other than editorial amendments made to reflect the deletion of certain Glossary terms. In SUP TP 8, unless otherwise specified, the term ‘approved person’ should be read as it had effect in the Handbook Glossary on 16 December 2015, and where the context requires, references to approved person include approved or notified person.
8.1 Purpose of SUP TP 8
8.1.1 G SUP TP 8 has transitional and grandfathering provisions relating to
the changes to the approved persons approved persons regime made by Part 4 of the Financial Services (Banking Reform) Act 2013. The Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 (as amended):
…
8.1.2 R SUP TP 8 applies to:
…
(2) approved persons approved persons of firms in (1).
…
8.2 Grandfathering of approved persons: requirement to give notice and
equivalence of old and new functions
8.2.1 R A firm is not required to give notice to the FCA for the purposes of
article 2(1) of the Financial Services (Banking Reform) Act 2013
Transitional and Savings Provisions Order 2015 in relation to any approved person approved person for whom the FCA granted a preimplementation approval in relation to that firm. [Note: see article 2(2) of the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015] … … …
8.3.5 G If a firm gives a grandfathering notification for an approved person
approved person and that approved person approved person leaves

FCA 202X/YY the firm or gives up performing some of their controlled functions, the firm should notify the appropriate regulator using Form C in addition to SUP TP 8. … … … TP 11 Bank of England and Financial Services Act 2016: Approved persons in insurers TP 11 Note to the reader SUP TP 11.1.-1 G SUP TP 11 has not been amended since 26 July 2019, other than editorial amendments made to reflect the deletion of certain Glossary terms. In SUP TP 11, unless otherwise specified, the following terms should be read as they had effect in the Handbook Glossary on 26 July 2019, subject to any modifications specified below:
(1) ‘approved person’, and where the context requires, references to approved person include approved or notified person; (2) ‘current approved person approval’, and where the context requires, references to current approved person approval include current SMF approval or notification; (3) ‘current FCA approved person approval’, and where the context requires, references to current FCA approved person approval include current SMF approval or notification; (4) ‘other local responsibility function’; and (5) ‘other overall responsibility function’ SUP TP 11.1 Application and purpose …

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SUP TP
11.1.2
G (1) SUP TP 11 has transitional provisions relating to the changes to the approved persons approved persons regime made by Part 2 of the Bank of England and Financial Services Act 2016 and the Individual Accountability (Dual-Regulated Firms) Instrument 2018. … … SUP TP 11.2 Conversion of existing approvals SUP TP 11.2.1 R If the conditions set out in SUP TP 11.2.2R are met, a preimplementation approval in relation to a particular approved person approved person (AP) and a particular SMCR insurance firm (F) has effect on and after the commencement date as if it had been given in relation to the FCA-designated senior management function or FCA-designated senior management functions specified in SUP TP 11.2.2R(2) and (3). … SUP TP 11.2.7 G (1) The general principle is that a pre-implementation approval cannot be converted to approval for an FCAdesignated senior management function if that FCAdesignated senior management function will not apply to the firm or to the particular approved person approved person on the commencement date. … SUP TP 11.2.8 G Another example of the principle in SUP TP 11.2.7G is that if:
(1) the result of SUP TP 11.2 would otherwise be that an approved person approved person is deemed to be approved to perform the other overall responsibility function other overall responsibility function or the other local responsibility function other local responsibility function; and (2) either that approved person approved person:
…

FCA 202X/YY that approved person’s approved person’s pre-implementation approval will not be converted into approval for the other overall responsibility function other overall responsibility function or the other local responsibility function other local responsibility function (whichever is applicable). SUP TP 11.2.9 R (1) A notification to the FCA is not to be taken into account for the purposes of SUP TP 11.2.2R(4) so far as it concerns a particular approved person approved person if the firm does not include a statement of responsibilities about that approved person approved person with the notification when required to do so by SUP TP 11.11. … … SUP TP 11.2.11 R (1) This rule applies to a firm (referred to as ‘B’ in this rule) in relation to an approved person approved person (referred to as ‘AP’ in this rule) if:
…
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SUP TP
11.2.12
G …
(2) The effect of SUP TP 11.2.11R is that if immediately before the commencement date, an approved person approved person is taking advantage of SUP 10A.11.12R they will be able to rely on the corresponding arrangement in SUP 10C.9.8R for as long as they have approval for performing a PRA controlled function. … … SUP TP 11.5 Notification to the FCA: Initial notification SUP TP 11.5.1 R (1) A notifying firm must notify the FCA of:

FCA 202X/YY
…
(b) the approved person approved person in respect of whom that pre-implementation approval was given; and … … … SUP TP 11.5.3 G … (3) A firm should not include a pre-implementation approval if:
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(b) the firm considers that the approved person approved person will not be performing that FCAdesignated senior management function on the commencement date. (4) Therefore, a firm should not include an approved person approved person who plans to resign before the commencement date if it is intended that they will have left the firm before then. … SUP TP 11.5.4 G If the firm considers that some of an approved person’s approved person’s pre-implementation approvals will be converted and some will not be, the firm’s notification should:
(1) include the approved person approved person; but … SUP TP 11.6 Notification to the FCA: Revision of initial notice …

FCA 202X/YY
SUP TP
11.6.3
G …
(2) A firm need not include in a notification under SUP TP
11.5 an approved person approved person who plans to
leave the firm before the commencement date. However that plan may change and as a result the firm may later conclude that the approved person approved person will carry on with their job after the commencement date. If so, the firm should revise the notice. (3) If, after the notice to the FCA, the FCA grants an approval under section 59 of the Act (Approval for particular arrangements) to someone who did not have any such approval for the firm at the time of the notice, the firm should revise its notice by including that new approved person approved person and that new preimplementation approval. (4) If, after a firm has given the notice to the FCA, the FCA grants a new approval under section 59 of the Act to someone who already was an approved person approved person for the firm when the firm gave the notice to the FCA, the firm should revise its notice by including that new pre-implementation approval. (5) If a firm includes an approved person approved person in a notification under SUP TP 11.5 and the firm later concludes that that person’s pre-implementation approval will no longer qualify for conversion because that person will not be performing the relevant FCAdesignated senior management function for the firm on the commencement date, the firm should revise its notice. Possible reasons for this include:
(a) the approved person approved person leaves the firm; (b) the approved person approved person tells the firm they are going to leave the firm before the commencement date; or (c) the approved person’s approved person’s job changes so that it will no longer involve performing an FCA-designated senior management function on the commencement date.

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