Regulatory consultancy Sturgeon Ventures says that while the SMCR is a positive step for the sector the exclusion of appointed reps is a “strange omission.”
The SMCR is a replacement for the Approved Persons Regime and applies to FCA solo-regulated firms as well as banks and insurance companies.
Its aim is to improve governance in financial services firms by making a wider group of managers and other staff more accountable compared to the Approved Persons Regime.
This includes making them responsible for their own, ethics, culture and continuing professional development (CPD) activities monitored by the firm and not the regulator, says Sturgeon.
Seonaid Mackenzie, managing partner at Sturgeon, said: “The SM&CR will significantly improve accountability among individuals in the industry, but it needs to apply to ARFs as well if it is to give any kind of consistency across the industry.
“Quite why the FCA failed to include ARs - both firms and individuals - is anybody’s guess but it is a strange omission, possibly made because the regulator is busy preparing for Brexit.”
Sturgeon sees other impacts from the SM&CR, including:
- Consumers may find it difficult to check whether their financial advisers are fit and proper because there is a 12-month window for companies and individuals to switch their listing from the current Firm and Approved Persons Directory to the new SM&CR Registry. They may also be confused as to why some advisers are ‘certified’ and others are ‘approved’
- There will be a burgeoning market for regulatory technology (‘RegTech’) firms to provide online CPD platforms that record and declare activity
- The positive side of the ARFs not being included is that the SMF of a Principal Firm with ARFs can prepare the ARFs for direct authorisation and implementation of their own SMFs and Certified Persons procedures.
Sturgeon has also announced that it has become a Corporate Supporter Firm of the Chartered Institute for Securities & Investment.
Sturgeon Ventures provides regulatory and other advice to start-up firms until they can be directly regulated by the FCA.