Analyzing FCA CP 14/13
On 30 July 2014 the FCA and PRA published a joint consultation paper on ‘Strengthening accountability in banking: a new regulatory framework for individuals’ (FCA CP14/13 or PRA CP14/14).
At this time the rules, if implemented, will only apply to banks, building societies and PRA authorised investment firms. However, it is understood that the regulators may extend the new regime to the wider regulated market.
The regulator has proposed two new regimes; a Senior Management Regime (SMR), replacing a number of Significant Influence Functions, and a Certification Regime (CR), covering all other existing Approved Person roles, but extending the coverage to include other, as yet, undefined roles.
A positive side to this proposal is that there will be a reduced requirement for individual regulatory authorisation, insomuch as only persons who are to hold Senior Management Functions (under the SMR) will require regulatory approval.
The new CR roles will not be subject to regulatory approval; instead, member firms will be required to certify that persons appointed are ‘fit and proper’ to perform their role. The regulator may mandate a minimum standard of due diligence for such roles, including criminal record checks and 5 years employment referencing.
Those PRA and FCA regulated firms currently in scope for this consultation paper, need to understand how these changes are likely to impact their business, the wider financial regulated market needs to keep a watching brief, just in case the new rules are extended. Consultation ends on the 31st October 2014.