What are ‘Prescribed Responsibilities’?

“Prescribed Responsibilities” are specific responsibilities that must be allocated to at least one senior manager.  They apply to enhanced firms and core firms, but not to limited scope firms or EEA branches.  Unsurprisingly, more Prescribed Responsibilities exist for enhanced firms than is the case for core firms.

The purpose of Prescribed Responsibilities is to make sure that there is an identified individual who has responsibility for implementation of all aspects of the SM&CR as well as certain other risks, such as financial crime and client money.

Allocation of Prescribed Responsibilities

Prescribed Responsibilities should be allocated to the Senior Manager who is the most senior person responsible for the particular issue.  Generally, Prescribed Responsibilities cannot be allocated to someone performing the role of SMF 18 (Other overall responsibility).  The only exception to this is the Prescribed Responsibility relating to CASS compliance.

All Prescribed Responsibilities applicable to the firm must be allocated across the set of Senior Managers.  In practice, they may be allocated to a smaller sub-set of the Senior Managers.  However, it is not advisable simply to allocate all Prescribed Responsibilities to the Head of Compliance as this may undermine the role of the Compliance Department as a “second line of defence”.

Note that, in all cases and as a minimum, a Senior Manager will have to be allocated the following Prescribed Responsibilities:

  1. performance by the firm of its obligations under the Senior Managers Regime, including implementation and oversight;
  2. performance by the firm of its obligations under the Certification Regime;
  3. performance by the firm of its obligations in respect of notifications and training under the Conduct Rules; and
  4. responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime.

Reallocation of Prescribed Responsibilities

Reallocating a Prescribed Responsibility from one Senior Manager to another will not trigger a need to seek FCA approval of the change (or reapproval of the individual).  However, it will require amendment to the relevant Senior Managers’ Statements of Responsibilities.

Sharing or dividing Prescribed Responsibilities

Normally, a Prescribed Responsibility should only be held by a single individual.  There are a limited number of circumstances where a Prescribed Responsibility can be divided or shared (for example, as part of the handover of a role), but this is rather frowned upon by the FCA.  As such, justification for dividing or sharing a Prescribed Responsibilitity will have to be provided.  Where a Prescribed Responsibility is shared or divided, both Senior Managers will be jointly liable.

List of Prescribed Responsibilities

A full list of Prescribed Responsibilities is provided here:

PR Ref PR Description Limited Scope Core Enhanced Authorised fund manager EAA Branch Non-EAA Branch Common allocation Notes
(a)
Performance by the firm of its obligations under the Senior Managers regime, including implementation and oversight.
X
X
X
SMF 1
Not SMF 18
(b)
Performance by the firm of its obligations under the Certification Ragime.
X
X
X
SMF 16
Not SMF 18
(b1)
Performance by the firm of its obligations in respect of notifications and training of the Conduct Rules.
X
X
X
SMF 16
Not SMF 18
(c)
Compliance with the rules relating to the firm's Responsibilities Map
X
SMF1, SMF9
(d)
Responsibility for the firm's policies and procedures for countering the risk that the firm might be used to further financial crime.
X
X
X
SMF16, SMF17
Not SMF18
(f)
Policies and procedures for induction, training and development of the governing body.
(g)
Policies and procedures for induction, training and development of the SMF managers and key function holders.
(j)
Safeguarding and overseeing the independence and performance of the internal audit function (in accordance with SYSC 6.2)
X
SMF10, SMF11
Non-exec senior manager preferred
(j2)
Providing an effective non-conflicted internal audit and overseeing the performance of the internal audit function if the firm outsources its internal audit to an external 3rd party.
X
(j3)

If the firm outsources its internal audit function, taking reasonable steps to make sure that every person involved in the performance of the service is independent from the persons who perform external audit, including:

  • Supervision and management of the work of outsourced internal auditors.
  • Management of potential conflicts of interest between the provision of external audit and internal audit services.
X
SMF2, SMF3
(k)
Safeguarding and overseeing the independence and performance of the compliance function (in accordance with SYSC 6.1)
X
SMF9, SMF10
Non-exec senior manager preferred
(l)
Safeguarding and overseeing the independence and performance of the risk function (in accordance with SYSC 7.1.21R & SYSC 7.1.22R).
X
SMF9, SMF10
Non-exec senior manager preferred
(m)
Development and implementation of the remuneration policies and practices (where applicable under SYSC 19D).
(n)
Whistleblowers' champion (where applicable)
(s)
Managing the firm's internal stress tests and ensuring the accuracy and timeliness of information provided to the FCA for stress testing.
X
SMF4
(t)
Developing and maintaining the firm's business model.
X
SMF1, SMF3, SMF9
(z)
Responsibility for the firm's compliance with CASS (if applicable).
X
X
X
X
(aa)
Responsibility for management of the firm's risk management processes in the UK.
X
(ee)
Responsibility for the escalation of correspondence from the PRA, FCA and other regulators in respect of the firm to the governing body and/or the management body of the firm or, where appropriate, of the parent undertaking or holding company of the firm's group.
X
(ff)
Responsibility for the firm's compliance with the UK regulatory system applicable to the firm.
X
(za)
[Authorised Fund Managers only] Responsibility for an AFM's value for money assessments, independent director representation and acting in investors' best interests. This PR only applies to AFMs. For more details, see CP17/18, MS15/2.3 - Assessment Management Market Study: Final Report and PS18/8.
X
X
X
X
X
SMF9

Everything you wanted to know about SM&CR - but were afraid to ask!

New to SMCR – or need a hand getting up to speed withj SMCR compliance? This guide will help you understand and implement every part of the SM&CR. You’ll learn, amongst other things:

  • How firms are classified.
  • How to identify Certification Staff.
  • The Responsibilities of a Senior Manager.
  • Conduct Rules & how they apply to your role.

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