The obligation is included in issued new, more flexible guidance for firms covered by the Senior Manager & Certification Regime on coping with the pandemic.
The FCA says while it will allow firms directly affected by Coronavirus more flexibility in making Senior Manager changes they need to keep their governance arrangements under review and “make appropriate changes as circumstances change.”
The FCA will also issue a Modification by Consent to the 12-week absence rule to support firms using temporary arrangements during the crisis. The rule means firms can allow an individual to cover for a Senior Manager without being approved, where the absence is temporary or reasonably unforeseen, and the appointment is for less than 12 consecutive weeks.
If temporary arrangements last longer than 12-weeks as a result of the crisis, firms can notify the FCA and temporary arrangements can be extended up to 36 weeks, the FCA said.
The regulator says it will not require firms to have a single Senior Manager responsible for their Coronavirus response - but firms should allocate responsibilities on dealing with the outbreak among Senior Managers and regularly assess the risks that their firms face.
The guidance is for solo firms but the FCA has also published expectations for dual-regulated firms in tandem with the Prudential Regulation Authority Here.
The Senior Managers and Certification Regime replaced the Approved Persons regime and was extended to financial advisory firms in December. It covers most authorised financial firms including financial advisory firms.
The FCA says in its updated guidance Senior Managers should be considering:
• where the current situation might lead to emerging risks, and
• how it affects existing risks, along with the controls used to manage them
Details of Senior Manager responsibilities are in an earlier FCA statement https://www.fca.org.uk/firms/information-firms-coronavirus-covid-19-response#smcr.
The FCA says it recognises that some firms may need to make temporary arrangements or change Senior Manager responsibilities in response to the pandemic and sickness among staff.
If this happens the regulator says to minimise the burden on firms it will not enforce the requirement on firms to submit updated Statements of Responsibilities (SoRs). This applies if the change is made temporarily to cover multiple sicknesses, or other temporary changes in responsibilities in response to the pandemic.
It does, however, expect clear internal documentation “so that everyone understands who is responsible for what.”
Firms should also update their FCA supervisors of any furloughing of one or more Senior Managers by emailing or calling the regulator.
The FCA has also updated rules on furloughed workers and the SM&CR. Firms are asked to reallocate the Prescribed Responsibilities of a furloughed Senior Manager to another Senior Manager.
The watchdog adds, however, that individuals performing required functions – eg Compliance Oversight, the money laundering reporting officer (MLRO) and the Limited Scope Function – should only be furloughed as a “last resort.”