Business disruption caused by the coronavirus pandemic has forced the Financial Conduct Authority to delay the introduction of the Senior Managers & Certification Regime (SMCR) to solo-regulated firms.
The FCA said in a statement on 1 July that the Treasury had agreed to delay the first of assessment of the fitness and propriety aspects of the Certified Persons element of the regime from 9 December 2020 to 31 March 2021, thereby giving firms "significantly affected by the coronavirus pandemic time to make the changes they need".
With many of the requirements applicable to dual-regulated asset and wealth management sector firms as of December 2019, SMCR introduces new administrative, regulatory and conduct rules that banks and other large financial institutions have been subject to since 2016.
The FCA has responded to the current situation by giving firms more time to implement SMCR."
SMCR aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct, while encouraging a culture of personal responsibility throughout businesses.
The FCA confirmed the 31 March date will apply to conduct rules and the deadline for submission of information about "directory persons" to its register.
It explained that "in order to give regulated firms certainty" the regulator must "consult alongside parliamentary process" to allow it to finalise its policy "as soon as possible".
However, the FCA said senior managers must ensure that conduct rules training is still in place so that staff understand how to apply it in their jobs. The regulator will also soon produce "further communications about our expectations" for training processes.
Firms should also continue with their SMCR work programmes of work and, if they are able to certify staff earlier than March 2021, they should do so.
Details of certified employees of solo-regulated firms will be published as planned on 9 December 2020 on the Financial Services Register.
Commenting on the decision, managing director within Duff & Phelps' compliance and regulatory consulting practice Mark Turner said: "The FCA has responded to the current situation by giving firms more time to implement SMCR.
"What this is not, however, is an invitation for firms and their staff and management, to act in a way that is not compliant with the conduct rules.
"Senior managers are already accountable under SMCR and will remain so during this transition period. Any significant issues will find their way up to a senior manager when it comes to regulatory accountability."