As the UK’s senior managers and certification regime (SMCR) comes into force, it was expected that client-facing advisers, operating under customer function 30 (CF30), would fall off the register or that the information might simply become out of date.
CF30, in addition to other things, covers firms and individuals advising on investments, providing advice to clients, and investment dealing and management.
The register looked set to become of little use to consumers and indeed to advisers checking out the status and career history of new hires.
But with members of parliament now asking questions, public affairs and regulatory experts at Cicero Group, Grant Thornton and TCC Consulting say the chances of a reprieve have increased substantially.
“From an SMCR perspective, there was a groundswell of opinion that the proposed removal of the FCA register for CF30s was wrong."
Phil Deek technical director at compliance consultants TCC Consulting, says: “The announcement of the extension of the SMCR heralded the proposed demise of the FCA register for CF30s – certification and self-regulation was the proposed future and the ‘need’ to maintain a register was deemed superfluous to requirements.”
The SMCR was created after the financial crisis to make senior management at banks and insurers personally responsible for misconduct by their staff.
“Operationally, it also frees up resource within the FCA – moving away from the relatively administrative task of maintaining the register for CF30s to other, higher priory and more urgent, challenges,” Deek said.
However, recent events may have added some political heft to the adviser and industry opposition to the register’s demise.
The Work and Pensions Select Committee inquiry into pension freedoms has seen MPs asking some very searching questions about British Steel Pension Scheme (BSPS) transfers – indeed it has been tantamount to an mini-inquiry within an inquiry.
The committee and its chair, veteran Labour MP Frank Field, appeared less than impressed with the FCA approach and the issue of the register’s future, prompted by BSPS members’ concerns, has been raised in correspondence with the FCA.
The relevant passages come in a letter to Field from the FCA director of supervision Megan Butler, published in late December. Butler’s letter was in response to previous correspondence from Field.
Field said: “Can you confirm your experiences [with the BSPS] in Port Talbot [Wales] will inform your decision of whether to relax your proposed certification regime?”
Butler responded: “In 2016, as part of the Bank of England and Financial Services Act, parliament gave the FCA a duty to extend SMCR to the majority of the other firms the FCA regulates. This includes insurers, asset managers, consumer credit firms and investment advisers. During summer 2017, we published a consultation setting out how, in line with this legislation, we intend to extend the SMCR.
“As part of this, we proposed that any individual undertaking a certification function, including customer-facing investment advisers, would need to be certified as fit-and-proper by their firm at least annually. We also proposed that these individuals would not appear on our Financial Services Register reflecting that firms, not the FCA, would be responsible for certifying these individuals as fit-and-proper to undertake their role.
“We received substantial feedback to our suggestion that certified individuals should not appear on our register. A number of these respondents expressed concern that this proposal could inhibit consumers’ ability to identify an adviser and ensure they are appropriately qualified.
“We are currently reviewing all feedback to this consultation, including the input received around the register. We have listened to these concerns and are considering this feedback, as well as the experiences in Port Talbot, as we work toward determining the right approach to extending the SMCR.”