On 8th March the FCA published its Final Guidance on Statements of Responsibilities (SoRs) and responsibilities maps under the Senior Managers and Certification Regime (SM&CR).
The Final Guidance builds on the FCA’s SM&CR guidance for solo-regulated firms published in July 2018 and followed the FCA’s consultation on the subject in October 2018. It aims to give FCA solo-regulated firms practical assistance and information on preparing SoRs and responsibilities maps prior to the roll out of the new rules in December 2019.
Statements of Responsibility
A SoR is a single document that every Senior Manager will need to have under the SM&CR which clearly sets out their individual roles and responsibilities. Its purpose is to make clear what Senior Managers are responsible for under the ultimate accountability of a firm’s governing body.
The FCA has emphasised that SoRs should be self-contained, clear, easy to use and focus on what the role holder is accountable for, rather than describing the holder’s competencies and skills. The Final Guidance also provided a comprehensive list of the questions that firms should consider when compiling such documents and provided various examples of SoRs for enhanced, core and limited scope firms. Examples of poor practice highlighted by the FCA included a lack of clarity around how individuals were sharing responsibilities, circular reporting lines and inadequate explanations of specific roles.
Responsibilities Maps
A responsibilities map provides an overview of how a firm is managed and governed. This should contain key information about governance bodies, senior management reporting lines and Senior Managers’ responsibilities. The FCA noted in its Final Guidance that good responsibilities maps usually have a mixture of graphics and text and are easy to navigate and comprehend. The guidance also emphasised that firms in groups should ensure that such maps capture group-level governance and management committees to the extent these are relied on.
The FCA has re-iterated that it expects firms to apply its guidance in a risk-based and proportionate way, considering the size, nature and complexity of the firm. It also noted that the examples of good and poor practice provided in the Final Guidance were not exhaustive and that its sample responsibilities maps should not in any way be interpreted as guidance on how firms should organise their governance or management arrangements.
The SM&CR will apply to all FCA authorised firms from 9 December 2019. All Senior Managers will be required to have a FCA approved SoR in place setting out their responsibilities. All enhanced firms must also have a responsibilities map in place showing how their firm is managed and governed.
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