Understanding how the FCA categorises firms for the purposes of SMCR compliance is crucial in beginning to understand how the specifics Regime apply to your specific business circumstances. The flowchart below sets out a basic guide.
SM&CR FIRM TYPE
- Principal purpose is to carry on activities other than regulated activities.
- It is not a MiFID investment firm.
Examples of the following types of firms will fall in this category:
- Limited permission consumer credit and debt advisory firms.
- Sole traders.
- Authorised professional firms whose only regulated activities are in non-mainstream regulated activities (e.g. law firms).
- Oil market participants.
- Service companies.
- Energy market participants.
- Subsidiaries of local authorities or registered social landlords.
- All other FCA solo-regulated firms not caught as an Enhanced firm or limited scope firm fall in this category.
- Core firms have to meet baseline requirements.
- Firms that are significant investment firms (IFPRU).
- Large CASS firms.
- Have assets of £50 billion or more (at any time in the last 3 years which will be calculated as a three-year rolling average).
- Have total intermediary regulated business revenue of £35m per annum or more (calculated on a three-year rolling average).
- Firms with annual regulated revenue generated by regulated consumer lending of £100m or more per annum (calculated on a three-year rolling average).
- Non-bank mortgage lenders and administrators with 10,000 or more regulated mortgages outstanding.
Firms who need further information about which category they belong to can also use the flow diagram under SYSC 23, Annex 1.1R to confirm which SM&CR firm type they are.
Having confirmed which category they fall within, firms can then establish which requirements will apply to them. Due to their size, complexity and the risk they present to the market, enhanced scope firms are subject to the greatest burden under the SM&CR. Core firms are exempt from some of the requirements applicable to enhanced scope firms (including those relating to Management Responsibility Maps, Handover Procedures and the “Overall Responsibility” requirement). Limited scope firms are subject to the fewest number of requirements under the SM&CR.