FCA discussion paper on overall responsibility and legal function under SMR

Practical Law UK Legal Update w-003-6528 (Approx. 3 pages)

FCA discussion paper on overall responsibility and legal function under SMR

by Practical Law Financial Services

The FCA has published a discussion paper on overall responsibility and the legal function under the senior managers regime (SMR) (DP16/4).

On 28 September 2016, the FCA published a discussion paper on overall responsibility and the legal function under the senior managers regime (SMR) (DP16/4).

To ensure clear lines of accountability throughout a firm, one of the principles of the SMR and the certification regime is that a senior manager must have "overall responsibility" for each area of the firm's business, ensuring complete coverage. The FCA received feedback from firms questioning how senior management function (SMF) 18 (other overall responsibilities) applies to the legal function.

The FCA published a statement on individuals with overall responsibility for the legal function under the SMR in January 2016 (see Legal update, FCA statement on individuals with overall responsibility for legal function under SMR).

The purpose of DP16/4 is to clarify how and why the legal function is currently captured under the SMR, and to consider whether the legal function should continue to be part of the SMR going forward. Chapter 3 of DP16/4 sets out:

Reasons to exclude the head of legal function from the SMR. These relate to matters including the legal function being an advisory function, legal professional privilege, the independence of the legal function and the overlap of the head of legal function with other regulations.
Reasons to keep the head of legal function in the SMR. These relate to matters including the operational management of the function, privilege and the duty of responsibility, the fact that failings in the legal function can impact the wider business and the flexibility to allocate overall responsibility. To highlight the consistent approach of the FCA and its counterpart legal regulators, annex 1 to DP16/4 sets out a comparison of the FCA conduct rules with the principles of the Solicitors Regulation Authority.

Comments on DP16/4 can be made until 9 January 2017. If the FCA needs to take forward any further policy proposals it will issue a consultation paper.

For information on the SMR, see Practice note, Hot topics: Senior managers regime (SMR) for banks and PRA-designated investment firms.

End of Document

Also Found In

Resource ID w-003-6528

Published on 28-Sep-2016

Resource Type Legal update: archive

Jurisdiction

United Kingdom