FCA Requirements for Senior Managers during the coronavirus period.

The FCA have stated;

We do not require firms to have a single Senior Manager responsible for their coronavirus response. Firms should allocate these responsibilities in the way which best enables them to manage the risks they face. We recognise that some firms may need to make temporary arrangements to cover absences or change Senior Manager responsibilities in direct response to the pandemic. We want to minimise the burden to firms at this time, so we do not intend to enforce the requirement on firms to submit updated Statements of Responsibilities (SoRs), if the change:

  • is made to cover multiple sicknesses, or other temporary changes in responsibilities in direct response to the pandemic, and
  • is temporary and expected to revert to the firm’s previous arrangements

We do expect allocations (however temporary) to be clearly documented internally, so that everyone understands who is responsible for what. Firms’ internal records should aim to keep a ‘running commentary’ of their Senior Manager responsibilities during this period. This includes keeping Statements of Responsibilities up to date.  Firms should update their FCA supervisors of any furloughing of one or more Senior Managers by emailing or calling us. 

Temporary arrangements for Senior Management Functions 

A new 12-week rule allows an individual to cover for a Senior Manager without being approved, where the absence is temporary or reasonably unforeseen. If temporary arrangements last longer than 12-weeks as a result of the crisis, firms can notify us that they consent to a modification of the 12-week rule. In these cases, temporary arrangements can 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. Usually, Prescribed Responsibilities can only be allocated to another approved Senior Manager under this rule. We expect firms to still do this, if possible.

Furloughed staff

There may be cases where firms decide to furlough Senior Managers if they are unable to fulfil their responsibilities, for example due to illness, caring responsibilities or if they have no current practical responsibilities. Unless a furloughed Senior Manager is permanently leaving their post, the manager will retain their approval during their absence and will not need to be re-approved by the FCA when they return. The firm is still responsible for ensuring the Senior Manager is fit and proper. We do not expect firms to send updated SoRs to the FCA for the furloughed Senior Manager or for the Senior Managers taking on their responsibilities while they are away. 

Reallocating Prescribed Responsibilities 

The firm should reallocate the Prescribed Responsibilities of a furloughed Senior Manager to another Senior Manager.  However, if the firm appoints a temporary replacement under the 12-week rule, the proposed Modification by Consent allows a firm to reallocate the Prescribed Responsibilities to the replacement, even if they are not a Senior Manager. Individuals performing required functions – e.g. Compliance Oversight, the money laundering reporting officer (MLRO) and the Limited Scope Function – should only be furloughed as a last resort. Where a required function applies to a firm, the firm should replace the furloughed individual until their return. If the replacement is temporary, firms can use the 12-week rule to arrange cover.