In the Feedback Statement FS15/3 the FCA report on the main issues arising from Consultation Paper 15/10 ('Strengthening accountability in banking: UK branches of foreign banks') and publish the near final rules.

Highlights include:

  • Legislation extending the regimes (SMR and CR) to incoming branches went to parliament on 20 July 2015 and subject to approval will come into force on 9 November 2015.
  • Allocation of SMFs are not geographically restricted i.e. the individual could operate from another country but still have local responsibility.

Senior Managers Regime Non-EEA Branches

  • The policy intention is for the concept of ‘local responsibility’ to be the same as ‘overall responsibility’ in the regime for UK firms.
  • Overseas Branch Senior Manager (SMF20) has been removed and either or both the Executive Director (SMF3) function will be used (in relation to the branch only) or the new function Other Local Responsibility (SMF22) that will be similar to Significant Responsibility SMF (SMF18).
  • Other Local Responsibility (SMF22) will cover local responsibilities not covered by other SMFs but if all SMFs are already covered then SMF22 will not be required.
  • The Chief Finance function (SMF2), Chief Risk function (SMF4), Head of Internal Audit (SMF5) and Compliance Oversight (SMF16) are not required if nobody is currently performing the function however the local responsibility must be allocated to a senior manager.
  • Other branch responsibilities not covered by SMFs, such as individuals that report to the directly to the branch’s governing body, e.g. Head of IT, should approved as Other Local Responsibility (SMF22).
  • If there is an approved Control Function for CASS operational oversight (CF10A) this should be grandfathered to Other Local Responsibility (SMF22) if not allocated to another senior manager.

Senior Managers Regime EEA Branches

  • EEA Branch Senior Manager (EBSM) (SMF22) has been clarified to include individuals with ‘significant responsibility’ for a business unit (sometimes referred to as ‘significant business responsibility’) e.g. ‘Head of’ or member of a committee that takes decision for that business unit. Note this may still include the branch manager.
  • Responsibilities Map requirements have been amended for EEA Branches to reduce burden and duplication, e.g. the allocation of Prescribed Responsibilities. However, where such information is omitted, EEA Branches are required to provide details of where such information can be found, such as the Programme of Operations when the branch passports into the UK.

Certification Regime

  • Additional guidance has been provided in relation to the phrase ‘a client in the UK’.
  • Clarification has been provided on Significant Harm Functions.
  • There will be consultation on Regulatory References once feedback has been received regarding the Fair and Effective Markets Review (FEMR).

Conduct Rules

  • Notification of Conduct Rules breaches for senior managers remains at seven days, this includes suspected breaches.
  • If (after investigation) a suspected breach did not in fact take place then a further notification should be submitted.

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