The Certification Regime – Who this affects within your firm

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16 September 2019

Who needs to read this-

• Senior Management
• Retail Investment Advisers
• Mortgage Advisers
• Training and Competence Supervisors

The Certification Regime

With a lot of the awareness quite rightly on the SMCR currently, we wanted to really focus on the Certification component as we feel this is a much larger piece of work for regulated firms captured by the regulation change.  With a 12 month lead-in time, this gives firms time to get to grips with what the certification regime is trying to achieve.  Our advice is, spend time with planning this to get it right and get the most out of it.

From 9^th December 2019, the FCA will only authorise senior management roles, firms themselves will then hold the responsibility for assessing that certificated role holders are fit and proper to do so.

Who will become Certificated?

This applies to employees whose role means it is possible for them to cause significant harm to the firm or its customers.   Role holders won’t need to be approved by the FCA. Instead, firms will need to check and certify that they are fit and proper to perform their role at least once a year.

Firms will be required to make their own decisions as to whether the role that someone undertakes constitutes to be classified as Significant Management Certification function.   The decision to certificate someone performing a senior manager role would depend on the area of the business they were responsible for, size, nature and impact, therefore a compliance manager could require certification.

The role of the paraplanner has been discussed with regarding certification.  As the role differs between firms the FCA will expect a decision to be made at firm level dependent on the actual role being performed.

Retail Investment Advisers currently hold a controlled function which will be withdrawn, becoming certificated from Dec 2019.  Advisers who require a qualification to perform their role such as mortgage advisers will become certificated.   And anyone performing a Training and Competence supervisory role.

We are advising firms where there is any uncertainty as to whether a role is certificated or not that they discuss this with us to clarify.

What should firms be doing?

As you hold accountability for assessing if someone is fit and proper, our advice would be to start with your recruitment and induction process.  Does this show how and why that person is competent to undertake that role?  What does your process look like? Is it giving you the outcomes and evidence to satisfy the regulatory requirements?

Assessing competence both initially and ongoing needs a structure to evidence this.  How are you assessing competence?  Is this robust enough? After all, you will be accountable to demonstrate your decisions.

Does your T&C scheme reflect your business? Is this bespoke to your firm and not a template that has been downloaded and you are trying to make fit?  Training and Competence is a fundamental and crucial part of really achieving what is expected of firms.

Fit and Proper Testing

Firms are required to assess their certificated roles at least once a year in the following areas

• honesty, integrity and reputation;
• competence and capability; and
• financial soundness.

We can help to enhance this process and to move you away from tick-box assessment,  certainly for competence and capability.

What do you do if someone fails any part of this test, as you are wholly accountable going forward?

How can we support you

We are working with firms to strengthen their fit and proper assessments, from recruitment to ongoing competency validation.  We often find that a really good starting point is your T&C scheme and if this is giving you the evidence you need.

Looking for more information?  Head over to our Training & Competence page.