With the release of Consultation Paper CP18/19 in July 2018, it was announced by the Financial Conduct Authority (“FCA”) that they intend to set up the ‘Directory’, a new public register and user interface which will in essence be an expansion of the existing FS Register (or FCA Register as it is more commonly known). With an emphasis on empowering customers and other stakeholders to identify those individuals selling or providing advice or financial products that have been assessed as fit and proper by an authorised firm. The Directory will include the details of individuals who hold senior manager positions requiring FCA approval as well as individuals whom firms must certify are fit and proper. This would include those working in financial services firms with customer facing roles, such as financial advisors, investment advisors and mortgage advisors etc. The Consultation Paper was issued alongside a suite of publications setting out the near final rules and guidance on the extension of the Senior Managers and Certification Regime (“SM&CR”) to all solo regulated firms.
At it stands, the FCA offers the Financial Services Register (“FS Register”) as a public record of firms they regulate and the individuals the FCA and Prudential Regulation Authority (“PRA”) have approved. In the 12 months to March 2017, the FS Register was accessed over eight million times. The service exists to provide members of the public, firms, professional bodies, law enforcement agencies, regulators and other stakeholders access to information on financial services firms operating with in the United Kingdom.
Once SM&CR for solo regulated firms comes into effect, the FS Register will still exist but will be more sparsely populated. It will only include specific senior manager roles from firms authorised under the Financial Services and Markets Act 2000 (“FSMA”).
What is the FCA proposing to offer with the Directory?
The FCA is proposing to use the Directory to make information available on individuals undertaking a wide range of roles within financial services firms. This will include both those who need to be approved by the FCA as well as those who do not need such approval (financial advisors, traders, portfolio managers etc.)
The concept of the Directory is to offer the public access to the FCA’s database in a single, convenient location whilst making the service more accessible.
Who is affected and what needs to be done?
The firms most affected by the changes include:
- Banking firms (banks, credit unions, building societies);
- Insurers & reinsurers;
- All other firms authorised under FSMA to provide financial services; and
- Appointed Representatives (“ARs”) acting as agents for FCA authorised firms.
Within the firms listed above, the groups of individuals to be listed in the Directory will include:
- All Certified staff (i.e. those holding a certification function under the SM&CR);
- Non-Senior Manager Function (“SMF”) Directors (executive and non-executive);
- Individuals who are sole traders or Appointed Representatives who undertake financial services business with clients and require a qualification to do so, and
- Appointed Representatives who undertake financial services business with clients and require a qualification to do so.
The above categories of individuals are referred to collectively as ‘Directory Persons’.
Firms will need to provide the FCA with additional information on all relevant individuals who work on their behalf. This information will include:
- Workplace location;
- Business the individual is qualified to carry out;
- Any regulatory sanctions or prohibitions against an individual; and
- The date the information was last updated.
The emphasis will be on the firm to keep the information current and up to date.
The commencement date of the Directory will depend on the type of firm concerned and can be found in Table 3 of CP18/19, but broadly ties in with the dates indicated for SM&CR. The start date for banks, building societies, credit unions, insurers and reinsurers and any PRA designated firms as well as their ARs is 10 December 2018, with a 10 December 2019 deadline for upload of data. The start date for all other firms is planned for 9 December 2019, with a 9 December 2020 deadline for upload. It is important to note that until the final rules on SM&CR have been published, no action is required to be taken by firms.
The FCA invites feedback by 5 October 2018 on the proposals in the CP, but in the meantime, they will be publishing a prototype of the Directory’s user interface for people to give feedback of the end user experience.