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02. Determine your firm’s SM&CR classification

Introduction

Under the Senior Manager & Certification regime, all firms subject to the regime are defined as belonging to one of three classifications:

  • Limited scope
  • Core
  • Enhanced

When SM&CR came into force, or when your firm was registered with the FCA, they will have informed you of your classification in writing. However, your firm’s classification can change in the future depending on its trading activities. It is your responsibility to determine and report whether your firm has begun satisfying the various criteria for a different classification, for example moving from a Limited scope to a Core firm.

Corterum records all the specific criteria that govern the firm’s placing under the SM&CR classification matrix, making it easy for you to determine its classification:

The process

  1. Firstly, make sure that you have created your firm in the Entity database.
  2. Click Workbench and then select Datasets.
  3. Select General and then click Firm.
  4. Select Firm Classification and then click on the circular ‘plus’ symbol next to the dataset title. The Firm Classification dataset will then appear.
  5. Click on the Firm Name box and then select from the dropdown list the firm that you want to classify under SM&CR.
  6. Navigate to the Firm is a bank toggle and select the correct choice for your firm. If clicked, the toggle will become blue. If your firm is a bank, it might be an Enhanced firm under SM&CR depending on other criteria – you may wish to double check your firm’s classification.
  7. Move to the Exempt from the Approved Persons Regime?’ toggle and select the correct response. If your firm was exempt from the Approved Persons Regime, it will not be subject to SM&CR. However, you should still monitor its trading activities because it might satisfy SM&CR criteria in the future. Also be aware that any other legal entities associated with this firm could still be in-scope for SM&CR.
  8. Follow on to the Subject to Limited Application of Approved Persons Regime? and select the correct option for your firm. If your firm was subject to a limited application of the Approved Persons Regime, it will be a Limited scope firm under SM&CR.
  9. Navigate to the Significant IFPRU firm toggle and choose the relevant option for your firm. If your firm is a significant IFPRU firm, it will be an Enhanced firm under SM&CR.
  10. Go to the CASS Large Firm toggle and choose the correct option for your firm. If your firm is a CASS large firm, it will be an Enhanced firm under SM&CR.
  11. Click on the Assets Under Management box and type in the total value of the assets that your firm has under management (AUM). If your firm’s AUM has averaged £50 million or more when you consider the last three years combined, your firm will be an Enhanced firm under SM&CR.
  12. Next, click on the Total Intermediary Regulated Business Revenue box and type in your firm’s average revenue from FCA-regulated activities in the last three years. If the average figure (over three years) is £35 million or more, your firm will be an Enhanced firm under SM&CR.
  13. Click on the Annual Consumer Credit Lending Regulated Revenue box and type in your firm’s average revenue from regulated consumer credit lending activities in the last three years. If the average figure (over three years) is £100 million or more, your firm will be an Enhanced firm under SM&CR.
  14. Select the Number of Regulated Mortgages Outstanding box and enter how many mortgages your firm has outstanding on its books. If the figure is 10,000 or more, your firm will be an Enhanced firm under SM&CR.
  15. Now navigate to the Firm SM&CR Classification panel. Based on the information entered in this dataset and all other relevant information, decide and select whether your firm is a Limited scope, Core or Enhanced  firm under SM&CR. If your firm is Core, you must also indicate whether it is a UK, EEA or third-country firm.

Opting up

Under SM&CR, a firm can choose to opt-up to a higher classification under SM&CR; so, for example,  a Core firm can choose to become Enhanced.

If you have done this, you can document it in Corterum by:

  • Navigating to the panel titled Opting-up and Opting-down within the Firms section of the datasets.
  • If your firm has opted-up, click on the Firm Opted-Up? toggle.
  • Then, select the Date of Opt-up Notification box and indicate when you submitted Form O through Connect.
  • Click the Pre-opt-up categorisation box and select your original SM&CR classification from the list.
  • Finally, click on the Opt-up Notification button and upload a copy of the Form O you submitted to the FCA through Connect.    

Opting down

Under SM&CR, firms that have previously chosen to opt-up can return to their original classification; so, for example,  a firm previously classified as Core can choose to become Enhanced, then at a later date, choose to return to Core. 

To do this, you must revoke the Form O you submitted to opt-up, submit a new Form O stating your intention to opt-down and then wait 12 months. During that time you must abide by the rules pertaining to the higher of the two classifications.

If you have done this, you can document it in Corterum by:

  • Navigating to the panel titled Opting-up and Opting-down within the Firms section of the datasets.
  • Then click on the Firm Opted-down? toggle.
  • Then, select the Date of Opt-down notification box and fill in the date you repealed and replaced the Form O you originally used to ‘opt-up’ in Connect.
  • Click the Pre-opt-down box and select the SM&CR classification that you are returning to from the list.
  • Finally, click on the Opt-down notification button and upload a copy of the new Form O you submitted to the FCA through Connect to opt down

Regular reviews

Under SM&CR, you must periodically review whether your firm meets the criteria for a different SM&CR classification to its current one. Under FCA-rules, your firm’s classification will formally change 12 months after it begins to satisfy criteria for a different classification, but you are advised to re-examine your firm much more frequently than once per year.

You can record the dates when you reviewed your firm in Corterum by:

  • Navigating to the Review process panel.
  • Once there, click the Reviewer box and select the employee/user who last reviewed your firm.
  • Then click on the Date of last review box and indicate the date when the review was conducted.
  • Finally, click the Date of next review box and indicate when the next SM&CR-classification review is due.

Click Save and then Close. Your firm’s classification, and the reasons why it has been classified in this way, will now be permanently stored in Corterum.

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Next 03. Adding firm information
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