12-week rule tripling to cover Benchmark Admins and Appointed Representatives

In yet another response to the COVID-19 crisis, the FCA has extended an earlier modification of the “12-week” rule to cover Benchmark Administrators (BAs) and firms using Appointed Representative (ARs) arrangements.

 On 6 May 2020 the FCA published a modification by consent, tripling the period of the “12-week” rule. The rule allows a solo-regulated firm to appoint an unapproved individual to cover for a Senior Manager for up to 12 weeks. The modification extends the period to 36 weeks in cases where the absence arises as a result of the crisis. Consequential issues, such as crisis-caused delays to recruitment, are also covered. However temporary they may be, the FCA expects firms to continue documenting changes in governance arrangements, including via Statements of Responsibilities and Responsibilities Maps (if applicable). Firms may re-allocate Prescribed Responsibilities to the individual who is substituting for the absentee; in this case, the FCA expects that Prescribed Responsibilities will only be transferred to another approved Senior Manager. Firms that wish, or anticipate the need, to take advantage of the extension may do so by submitting an application to the FCA.

On 9 July 2020, the FCA published a direction concerning modification by consent of rule 10A.5.6R of the Supervision Manual, effectively applying the earlier modification to BAs and ARs. The accompanying webpage clarifies that an AR may not apply for the extension directly, application must be made by its principal firm or firms.  The direction will cease to have effect in relation to BAs on 7 December 2020, as these firms will then become subject to the SM&CR. The extension will continue to be available for ARs and solo-regulated firms until the expiry of both modifications on 30 April 2021.