COVID-19: the FCA clarifies obligations
Senior managers performing required functions such as compliance oversight and the money laundering reporting officer (MLRO) should only be furloughed as a last resort, the Financial Conduct Authority said in a statement. The regulator was setting out its expectations of solo-regulated firms for the Senior Managers and Certification Regime (SMCR) and COVID-19. It also set up its sometimes more demanding expectations in a separate statement for dual-regulated firms.
"Other senior management functions are not 'mandatory' so firms have greater flexibility to furlough the individuals performing them. For instance, if a firm temporarily suspends a business service or function due to the disruption caused by coronavirus it could, in principle, furlough the senior manager responsible for it," the FCA said in its statement for solo-regulated firms late on 3 April 2020.
The FCA's move received solid industry backing.
"The message here is that firms should think very carefully before they furlough their compliance oversight officer. They should ask themselves whether they will be able to replace the SMF16 skill set," said Simon Collins, Managing Director, Regulatory, who had been involved, along with various compliance professionals, in discussing the FCA's approach to senior managers during the coronavirus days before the regulator produced the paper.
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This article was first published in Thomson Reuters Regulatory Intelligence on 6 April 2020.