Helping to organise
A comprehensive checklist created from the Financial Conduct Authority’s Handbook and combined with best practice material to deliver over 400 Accountability compliance safeguards.
Senior Management Functions
The FCA expects the most senior employee managing that area to be the person in the frame, however, the governing body is still the ultimate decision maker and this person will either be a member of that body, or report directly to it. They should be equipped with the resources and authority to do their job properly.
To take on a Senior Management Function, individuals must be pre-approved by the FCA and firms must identify the areas of the business for which they are responsible. Each firm should consider organisation, how the business it carries out, and not to assign too much to any one individual. But every major activity and risk of the firm’s affairs must be allocated to someone.
This is a time-consuming and contentious challenge which could trigger a lengthy internal debate, as each senior manager tries to ensure they can perform their duties correctly given the quality and mix of resources available to them. If a failing does occur, the FCA will hold one person responsible and take appropriate action.
Relevant Authorised Persons
The main Business Activities and Functions of a Relevant Authorised Person have also been defined in the Handbook which is acts as a checklist to ensure that everything has been included in the Management Responsibilities Map. Whilst it sets out what the FCA thinks might be relevant to many firms, they do not have to organise themselves in this way.
Most front line activities are covered except for monitoring functions such as compliance, internal audit and the governing body. The majority of these activities will apply to a complex firm whilst many may not apply to a smaller firm, but there is no territorial limit to their application.
Statement of Responsibilities
A Statement of Responsibilities must be submitted when applying for approval of an individual to perform a Senior Management Function. A firm must, at all times, have a current document for every SMF manager and historical versions are essential for FCA supervision.
This document should clearly show how that individual fits into the firm’s overall governance arrangements and be consistent with its Management Responsibilities Map. It should be practical and useable without unnecessary detail and complete by itself without referring to other documents, but if the FCA asks a firm to take remedial action, it may also ask them to add more information.
Management Responsibilities Maps
Enhanced firms must also have a comprehensive and up-to-date Management Responsibilities Map. This document should describe management and governance arrangements, reporting lines, and details about relevant individuals. It should contain the names of all the firm’s certified persons, governing body and senior management along with the responsibilities they hold.
The map should act as a gap analysis that could support a business recovery plan and for small firms it will be short and simple, perhaps taking up no more than a page. One senior manager will be given responsibility for production of this document and if not done correctly he or she will be at risk of a breach.
Solvassure. Compliance Technology.