August 6, 2020

Volume X, Number 219

August 06, 2020

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August 05, 2020

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August 04, 2020

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FCA Statement on Expectations of Solo-Regulated Firms

On April 3 the UK’s Financial Conduct Authority (FCA) published a statement setting out its expectations for solo-regulated firms applying the Senior Managers and Certification Regime (SM&CR) during the COVID-19 pandemic (the Statement).

In the Statement, the FCA clarifies that it does not require firms to have a single senior manager responsible for the COVID-19 pandemic response. Firms should allocate these responsibilities in the way which best enables them to manage their own risks. The Statement also explores a number of other requirements under the SM&CR, including:

  • the FCA does not intend to enforce the requirement on firms to submit updated statements of responsibilities, provided that the change is made to cover multiple sicknesses or other temporary changes in direct response to the COVID-19 pandemic. Such arrangements should be temporary and firms are expected to revert to their previous arrangements. The FCA expects firms to clearly document such changes;

  • the FCA intends to issue a modification by consent to the 12-week rule to support firms using temporary arrangements. Under the modification, firms are able to allocate prescribed responsibilities of the absent senior manager to an individual standing in for the absent senior manager. Firms are expected to clearly document these responsibilities;

  • the FCA does not expect firms to submit an updated statement of responsibilities of the absent senior manager or of the individual taking on the absent senior managers responsibilities;

  • the FCA notes that there may be cases where a senior manager is furloughed if they are unable to fulfill their responsibilities, for example due to illness, caring responsibilities or if they have no current practical responsibilities. Furloughed senior managers will retain their FCA senior manager approval during their absence, unless they permanently leave their post; and

  • firms should reallocate the prescribed responsibilities of a furloughed senior manager to another senior manager or to the individual acting as the senior manager’s replacement. Individuals performing required functions should only be furloughed as a last resort.

The Statement is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 101


About this Author

John Ahern, Financial Attorney, London, Katten Law Firm

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

+44 (0) 20 7770 5253
Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...