Overall responsibility and the legal function: DP16/4

Open consultation: DP16/4
28/09/2016
Consultation closed
09/01/2017
09/01/2017
Policy statement
Q3 2019

In September 2016, we launched Discussion Paper DP16/4 to clarify how and why the legal function is currently captured under the Senior Managers and Certification Regime (SM&CR) and to consider whether it should continue to be part of the regime. We have now published Consultation Paper CP19/4 that summarises the feedback received and sets out our response.

Read CP19/4 (PDF)

The new accountability regime, the SM&CR, came into force for banking firms on 7 March 2016 and 10 December 2018 for insurers. It will apply to all FCA solo-regulated firms from 9 December 2019. The rules aim to enhance and embed a culture of individual responsibility and accountability within firms.

As part of our engagement with industry, firms have asked us how ‘Senior Management Function 18 – Other Overall Responsibilities’ (SMF18) applies to the legal function. We considered this in Discussion Paper DP16/4. Consultation Paper CP19/4 sets out details of the feedback received to DP16/4 and our proposal to exclude the Head of Legal from the requirement to be a Senior Manager.

Who this applies to

This paper will primarily be of interest to banking firms, Solvency II and large non-directive (NDF) insurers, and Enhanced solo-regulated firms. It will also be of interest to incoming branches of overseas relevant firms as well as other groups – particularly legal professional bodies. It may also be of interest to other FSMA-authorised firms that the SM&CR will be extended to.

This paper may also be of interest to consumers interested in how the SM&CR operates within relevant firms to enhance individual accountability.

Next steps

We will consider your comments to the consultation (CP19/4) and publish our feedback along with our rules.