Insights overview

FCA confirms final rules for FS Directory

The FCA has published the final rules for the new FS Directory (“the Directory”), which will be launched in March 2020 for banking firms and insurers and in December 2020 for all other firms. The Directory is part of the wider programme of changes being introduced by the Senior Managers and Certification Regime (“SMCR”),

Background

By way of reminder, SMCR comes into force for the majority of FCA solo regulated firms with effect from 9 December 2019. The regime, which has been in place for banks since March 2016 and for insurers since December 2018, makes a number of changes to the process for approval and assessment of fitness and propriety in respect of individuals working in the financial services industry. One of the changes introduced by the regime is the removal of the need for anyone other than a “senior manager” within a financial services firm to be approved by the FCA as a condition of them taking up their role. This will result in a significant number of individuals – mainly those holding the CF30 “customer function” – who are currently “approved persons” and who therefore appear on the current FCA Register no longer needing such approval or appearing on the register

In consultation papers published in 2018, and in response to concerns raised by many in the industry that this represented a backwards step, in that it meant less information was available in the public domain about those working in the financial services industry, the FCA proposed the introduction of a new online Financial Services Directory. Following consultation on these proposals, the FCA has now confirmed its final rules in this regard.

Scope of the Directory

The FCA has confirmed that the Directory will include the details of:

Certified persons within SMCR firms;
Directors of SMCR firms who are not SMFs or certified persons;
Sole trader SMCR firms who deal with customers or their property;
Appointed representative “directory persons” – those who are appointed representatives of SMCR firms or employed by such a firm but who are not themselves certified persons.

Provision of information to the FCA

Firms will be required to provide information to the FCA on their Directory persons, including updated information when individuals change roles, join or leave the Firm, and to confirm periodically that their Directory information is accurate. The FCA proposes to charge Firms an administrative fee if it finds that Directory information is inaccurate or incomplete.

The information Firms will need to provide to the FCA will include, in respect of each individual:

Name;
Date of birth
Role details
Workplace location;
The types of business they are qualified to undertake;
Their National Insurance number or passport number (albeit that the last element will not be published on the Directory).

Firms will be required to submit this information within seven business days of the individual commencing or ceasing the role which requires them to be included on the Directory.

Timescales

Banks and insurers will be required to provide their first set of data to the FCA by 9 December 2019, whilst other regulated firms will be required to provide this data by 9 December 2020.

What should firms be doing?

It will be important that Firms consider these requirements as part of their wider SMCR programme. The changes arguably re-emphasise the need for a holistic approach to SMCR implementation, including managing the Firm’s processes in respect of recruitment, vetting, internal moves and promotions and record-keeping.

Firms will also need to think where responsibility for the provision of Directory information to the FCA should sit within their organisation.

How Kemp Little can help

Kemp Little has extensive experience of working with banks and insurers on their SMCR implementation programmes and is currently working with a range of FCA solo regulated firms helping them prepare for the introduction of SMCR on 9 December 2019. Our mixture of regulatory and legal expertise means we are ideally placed to advise firms on the changes they need to introduce in order to comply with the requirements of the regime.