FCA relaxes SMCR rules during Covid-19 pandemic

The regulator said it recognises that some firms may need to make temporary arrangements to cover absences or change Senior Manager responsibilities in response to the pandemic.

The FCA will not require firms to submit updated Statements of Responsibilities if changes are made to cover sickness or other temporary changes which are expected to revert back after the pandemic.

However, the regulator said it expected allocations — however temporary — to be clearly documented internally and to be available if requested.

The FCA has also extended its 12-week rule to support firms using temporary arrangements during the crisis.

The 12-week rule allows an individual to cover for a Senior Manager without being approved, where the absence is temporary or unforeseen, and the appointment is for less than 12 consecutive weeks.

If temporary arrangements last longer than 12-weeks as a result of the Covid-19 crisis, temporary arrangements can now be extended up to 36 weeks.

Under the modification, firms will also be able to allocate the Prescribed Responsibilities of the absent Senior Manager to the individual who is standing in for the absent Senior Manager.

The FCA said that firms should still allocate to the most senior person responsible for that activity or area, "who has sufficient authority and an appropriate level of knowledge and competence to carry out the responsibility properly".

Again, firms will not have to submit updated Statements of Responsibilities "to minimise the burden to firms at this time".

Additionally, a furloughed Senior Manager will retain their approval during their absence and will not need to be re-approved by the FCA when they return. However, firms should update their FCA supervisors of any furloughing of one or more Senior Managers by email or phone.