Published: Wed, July 26, 2017
Markets | By Noel Gibbs

FCA proposes duty on asset managers to act in investors' interests

FCA proposes duty on asset managers to act in investors' interests

The Financial Conduct Authority (FCA) published proposals on Wednesday to extend the Senior Managers Regime to nearly all regulated firms.

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The FCA said it is committed to ensuring that the regime is proportionate according to the size of the firm, and therefore proposes applying a baseline of specific requirements to all regulated firms, called the "core regime". This simple set of rules means that individuals must act with integrity, act with due care, skill and diligence, be open and cooperative with regulators, pay due regard to customer interests and treat them fairly, and observe proper standards of market conduct.

The Senior Managers Regime was brought in as part of an attempt to rebuild public trust in an industry blighted by numerous scandals stemming from the financial crisis.

Five conduct rules that will apply to all financial services staff at FCA authorised firms.

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The Senior Managers and Certification Regime already applies to banks, and the FCA said in October it would consult on rolling this out to the wider market.

British financial regulators set out plans on Wednesday to broaden rules holding senior managers at banks and insurers accountable for misconduct inside their firms to encompass other financial services, including asset managers and brokers.

Up until now, when things went wrong the focus was on the companies and not an individual or a group, even though the latter are the ones at fault.

The Financial Conduct Authority is now consulting on how to apply the regime to all institutions it oversees, including investment managers, stock exchanges and trading firms.

United Kingdom regulators set out plans for ensuring senior staff of financial-services firms can be held to account for misconduct on their watch, extending rules already in place for banks to nearly all firms.

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Under the new rules firms will be handed more responsibility to approve staff who hold positions below senior management in rules known as the certification regime.

We wouldn't load on the SMR that would apply to an worldwide bank to a one-person firm. Anyone who holds a Senior Management Function needs to be approved by the regulator before they start their role, the same as under the Approved Persons Regime. Well they are the people who give advice.

But many in the industry have warned that this will still be a huge step up for smaller financial services firms.

For example, these firms will need to have Responsibilities Maps, Handover Procedures, and will need to make sure that there is a Senior Manager responsible for every area of their firm (Overall Responsibility).

The FCA has not addressed this issue in today's consultation but has said it will confirm how it intends to approach the regime for appointed representatives in a follow-up consultation paper - though it has not indicated when this will be published.

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