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FCA to Core Firms: Sorry not sorry

Keen readers of the Corterum blog may recall that we recently reported on the FCA’s “stealth” expansion of the Enhanced Firms category under the SM&CR. In brief, it seemed likely that the introduction of the new defined term “significant SYSC firm” would re-categorise a large number of firms from Core status to Enhanced. This change was thought to affect BIPRU firms, essentially those that may advise or execute, but lack authorisation to hold client money or deal as principal. The category change is material and onerous, Enhanced Firm status requires 17 “new” Senior Management Functions and 12 “new” Prescribed Responsibilities.  Given the range of additional obligations combined with the relatively proximate deadline of 31 March 2023, firms unsurprisingly expressed concern.

As a result, on the 16 August 2022 the FCA published a short note-, which concludes:

“We plan to consult shortly to make changes necessary to clarify that only firms that would have been both Significant IFPRU firms and IFPRU investment firms under the pre-IFPR arrangements fall within the new definition of ’Significant SYSC firm’ for the purposes of the Enhanced Scope SM&CR regime. In the meantime, we wish to make clear that firms that have unintentionally come under the Enhanced Scope SM&CR Regime under the new version of Significant SYSC, need take no action.”

So that’s all right then, nothing to see here, move on etc. The FCA should of course, be commended on its relatively swift action to announce that it intends to take action to correct the categorisation error. While there will clearly now be no impact on Core firms, the takeaway from this non-event is that as an extensive set of disparate rules, the SM&CR is capable of causing confusion even amongst its architects.

The SM&CR cuts across and interacts with a wide range of Regulations and is itself continually evolving. This only underlines the need to partner with SM&CR specialists, providing complete  to compliance, enabling you continue doing what you do best.