SYSC 24.2 Allocation of FCA-prescribed senior management responsibilities: Main allocation rules

(1) Responsibility for the firm’s performance of its obligations under the senior managers regime

The senior managers regime means the requirements of the regulatory system applying to SMCR firms insofar as they relate to SMF managers performing designated senior management functions, including SUP 10C (FCA senior managers regime for approved persons).

This responsibility includes:

(1) compliance with conditions and time limits on approval;

(2) compliance with the requirements about the statements of responsibilities (but not the allocation of responsibilities recorded in them);

(3) compliance by the firm with its obligations under section 60A of the Act (Vetting of candidates by authorised persons); and

(4) compliance by the firm with the requirements in SYSC 22 (Regulatory references) (and the corresponding PRA requirements)3 so far as they relate to the senior managers regime, including the giving of references to another firm about an SMF manager or former SMF manager.

(a)

(2) Responsibility for the firm’s performance of its obligations under the 3certification regime

The 3certification regime means the requirements of sections 63E and 63F of the Act (Certification of employees) and all other requirements of the regulatory system about the matters dealt with in or relating to2 those sections, including:

(1) SYSC 27 (Senior managers and certification regime: Certification Regime);

(2) the requirements in SYSC 22 (Regulatory references) so far as they relate to the 3 certification regime, including the giving of references to another firm about a certification employee or former certification employee; and2

(3) the corresponding PRA requirements; and2

2(4) the requirements in SUP 16.26 (Reporting of information about Directory persons), which require a firm to report information to the FCA about its Directory persons.

(b)

(3) Responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime

(1) This includes:

(a) responsibility for the firm’s policies and procedures in relation to the matters in SYSC 3.2.6R (Systems and controls in relation to compliance, financial crime and money laundering);

(b) the functions in SYSC 3.2.6HR or SYSC 6.3.8R (firm must allocate to a director or senior manager overall responsibility within the firm for the establishment and maintenance of effective anti-money laundering systems and controls);

if any of those rules apply to the firm.

(2) The firm may allocate this FCA-prescribed senior management responsibility to the MLRO but does not have to.

(3) If the firm does not allocate this FCA-prescribed senior management responsibility to the MLRO, this FCA-prescribed senior management responsibility includes responsibility for supervision of the MLRO.

(d)

(4) Responsibility for the firm’s obligations for:

(a) conduct rules training; and

(b) conduct rules reporting.

(1) The firm’s obligations for conduct rules training means its obligations under section 64B of the Act (Rules of conduct: responsibilities of authorised persons).

(2) The firm’s obligations for conduct rules reporting means its obligations under section 64C of the Act (Requirement for authorised persons to notify regulator of disciplinary action).

(b-1)

(5) Responsibility for:

(a) leading the development of; and

(b) monitoring the effective implementation of;

policies and procedures for the induction, training and professional development of all members of the firm’s governing body.

(f)

(6) Responsibility for monitoring the effective implementation of policies and procedures for the induction, training and professional development of all the firm’s:

(a) SMF managers; and

(b) key function holders;

other than members of the firm’s governing body.

(1) Key function holder has the same meaning as it does in the Glossary Part of the PRA Rulebook.

(2) Paragraph (b) of column (1) of this row (6) only applies to a firm if and to the extent that the PRA’s requirements about key function holders apply to it.

(g)

(7) Responsibility for:

(a) safeguarding the independence of; and

(b) oversight of the performance of;

the internal audit function, in accordance with the internal audit requirements for SMCR firms and the PRA requirements referred to in column (2) of this row

(1) This responsibility includes responsibility for:

(a) safeguarding the independence of; and

(b) oversight of the performance of;

a person approved to perform the Head of Internal Audit function for the firm if that function applies to the firm.

(2) This responsibility only applies if and to the extent that:

(a) the internal audit requirements for SMCR firms; or

(b) any requirements of the PRA about the matters in paragraph (1) of this column of this row (7);

apply to the firm.

(3) Independence means independence to the extent it is required by the requirements referred to in paragraph (2) of this column of this row (7).

(4) The Head of Internal Audit function means the head of internal audit function or3 the PRA’s Head of Internal Audit designated senior management function.

(j)

(8) Responsibility for:

(a) safeguarding the independence of; and

(b) oversight of the performance of;

the compliance function in accordance with the compliance requirements for SMCR firms.

(1) This responsibility includes responsibility for:

(a) safeguarding the independence of; and

(b) oversight of the performance of;

the person performing the compliance oversight function for the firm.

(2) This responsibility only applies if and to the extent that the compliance requirements for SMCR firms apply to the firm.

(3) “Independence” means independence to the extent it is required by the compliance requirements for SMCR firms.

(k)

(9) Responsibility for:

(a) safeguarding the independence of; and

(b) oversight of the performance of;

the risk function, in accordance with the risk control requirements for SMCR firms and the PRA requirements referred to in column (2) of this row (9).

(1) This responsibility includes responsibility for:

(a) safeguarding the independence of; and

(b) oversight of the performance of;

a person approved to perform the Chief Risk function for the firm if that function applies to the firm.

(2) This responsibility only applies if and to the extent that:

(a) the risk control requirements for SMCR firms; or

(b) any requirements of the PRA about the matters in paragraph (1) of this column of this row (9);

apply to the firm.

(3) “Independence” means independence to the extent it is required by the requirements referred to in paragraph (2) of this column of this row (9).

(4) The Chief Risk function means the chief risk officer function or3 the PRA’s Chief Risk designated senior management function.

(l)

(10) Responsibility for overseeing the development of and implementation of the firm's remuneration policies and practices in accordance with SYSC 19D (Remuneration Code)

This responsibility does not apply to a firm to which SYSC 19D does not apply.

(m)

(11) Responsibility for the firm’s compliance with CASS

(1) This responsibility only applies to a firm to which CASS applies.

(2) A firm may include in this FCA-prescribed senior management responsibility whichever of the following functions apply to the firm:

(a) CASS 1A.3.1R (certain CASS compliance functions for a CASS small firm);

(b) CASS 1A.3.1AR (certain CASS compliance functions for a CASS medium firm or a CASS large firm);

(c) CASS 11.3.1R (certain CASS compliance functions for certain CASS small debt management firms); 3

(d) CASS 11.3.4R (certain CASS compliance functions for a CASS large debt management firm); or3

(e) CASS 13.2.3R (certain CASS compliance functions for a firm carrying on a regulated claims management activity);3

but it does not have to.

(3) If the firm does not include the functions in paragraph (2) of this column of this row (11) in this FCA-prescribed senior management responsibility, this FCA-prescribed senior management responsibility includes responsibility for supervision of the person performing the functions in paragraph (2) of this column of this row (11) that apply to the firm.

(z)

(12) Responsibility for compliance with the requirements of the regulatory system about the management responsibilities map

(1) This responsibility does not include allocating responsibilities recorded in the management responsibilities map.

(2) This responsibility does not apply to a firm to which the requirements about management responsibilities maps in SYSC 25 (Senior managers and certification regime: Management responsibilities maps and handover procedures and material) do not apply.

(c)

(13) Acting as the firm’s whistleblowers’ champion

(1) The whistleblowers’ champion’s allocated responsibilities are set out in SYSC 18.4.4R.

(2) This responsibility does not apply to a firm that is not required to have a whistleblowers’ champion.

(n)

(14) Responsibility for:

(a) providing for an effective internal audit function in accordance with one of the sections of the PRA Rulebook listed in paragraph (2) of column (2) of this row (14); and

(b) overseeing the performance of the internal audit function.

(1) Only applies to a firm:

(a) that outsources its internal audit function to an external third party service provider; and

(b) to which one of the following internal audit PRA-prescribed senior management responsibilities applies:

(i) the responsibility in rule 3.3(1) in the Insurance – Allocation of Responsibilities Part of the PRA Rulebook; or

(ii) the responsibility in rule 3.2(1) in the Large Non-Solvency II Firms – Allocation of Responsibilities Part of the PRA Rulebook.

(2) The parts of the PRA Rulebook referred to in column (1) of this row (14) are:

(a) Solvency II firms - Conditions Governing Business 5; and

(b) Non-Solvency II Firms – Governance 9.2.

(3) Terms used in column (1) of this row (14) have the same meaning as they do for the corresponding PRA-prescribed senior management responsibility described in paragraph (1) of this column of this row (14).

(j-2)

(15) Responsibility for management of the firm’s risk management processes in the UK

(aa)

(16) Responsibility for the firm’s compliance with the UK regulatory system applicable to the firm

(ff)

(17) Responsibility for the escalation of correspondence from the PRA, FCA and other regulators in respect of the firm to each of the governing body or the management body of the firm and, as appropriate, of the firm’s parent undertaking and the ultimate parent undertaking of the firm’s group

This includes taking steps to ensure that the senior management of the firm and, where applicable, the group, are made aware of any views expressed by the regulatory bodies and any steps taken by them in relation to the branch, firm or group.

(ee)

3(18) Responsibility for taking reasonable steps to ensure that every person involved in the performance of the firm’s internal audit function is independent from the persons who perform external audit, including:

(a) supervision and management of the work of outsourced internal auditors; and

(b) management of potential conflicts of interest between the provision of external audit and internal audit services.

This only applies if the firm outsources its internal audit function.

(j-3)

3(19) Responsibility for:

(a) managing the firm’s internal stress tests; and

(b) ensuring the accuracy and timeliness of information provided to the FCA and other regulatory bodies for the purposes of stress testing.

Stress testing refers to stress testing under MIFIDPRU 7.5 (ICARA process: capital and liquidity planning, stress testing, wind-down planning and recovery planning).5

This responsibility only applies to a firm to which MIFIDPRU 7.55 applies.

(s)

3(20) The responsibilities allocated under COLL 6.6.27R, COLL 8.5.22R or COLL 15.7.24R4 (Allocation of responsibility for compliance to an approved person).

Only applies to a firm to which the rules in column (1) apply.

(za)

3(21) Responsibility for the development and maintenance of the firm’s business model by the governing body.

Business model means the same thing as it does in Schedule 6 to the Act (Threshold Conditions).

This responsibility applies even if the business model threshold condition does not apply to it.

(t)