R06, AF5, study presentation, significant management regime

Posted May 25, 2017

In this news update we cover:

1. Be Motivated to Study presentation
2. R06 and AF5 expected solution packages
3. What you need to know about the new regime for significant management
4. Training Directory

1. Be Motivated to Study presentation
By following our recent presentations you should have organised your study location, devised a study plan that suits you individually and prepared a schedule that gives you a work/life balance. We now turn our attention to becoming motivated to study.

You can make all the preparations and be ready to begin, but still find it difficult to actually get started and easily find other activities to occupy your time.

In 7 simple steps you can get your initial motivation at a high level and then maintain it over the duration of your studies. Success breeds success and seeing yourself making progress within your study plan will help to keep you on the right track throughout your journey.

Watch the Be Motivated to Study presentation:

learning to learn

2. R06 and AF5 expected solution packages
We will be preparing expected solutions for all the R06 and AF5 exams.  You can advance purchase access for the next exams now and get access immediately to the other preparation elements, see these links for further information:

R06 The Expected Solution Package

AF5 The Expected Solution Package

3. What you need to know about the new regime for significant management
This is a new regime for significant management and will come into effect in 2018 – the exact date is yet to be confirmed by the FCA. The regime is already in place though for Banks and Insurers so the requirements are already out there, for the rest of financial services firms the regime will be very similar so we can take the main points from the rules imposed on banks and insurers.

In summary:
The existing Approved Persons Regime (APER) will be replaced by the Senior Managers Regime (SMR), the Certification Regime and Code of Conduct (C-CON).

Some new  abbreviations:

  • SMF - Senior Management Function (New, but similar to ‘Significant Influence Function’ but with a narrower definition)
  • SIF - Significant Influence Function (to become defunct)
  • SoR - Statement of Responsibility (similar to a detailed Job Description: each SMF must have a SoR)
  • SHF - Significant Harm Function (New and applicable to those whose role could potentially cause customer detriment on a large scale). Someone with overall responsibility for complaint handling, product design or customer service possibly
  • MRT - Material Risk Taker (applies only to PRA regulated firms).

SMF functionaries
These must have SoR and firms must have a 'responsibilities Map' which is kept up to date and which ensures that every regulatory responsibility is specifically covered by a SoR with a SMF having ultimate responsibility.

For a smaller firm this map probably looks the same as their Compliance Monitoring Program ensuring that there is a name beside each area of responsibility and the SoR should already be contained in the Job Description for each role.

This is something that should be checked and updated even if only one person is responsible for everything - ensure that this is all articulated in writing. Commonly you may have different people with RIM, RMCD, CF10 & CF11 and so the areas of responsibility should be noted down.

All SMF should be familiar with C-CON, the new Code of Conduct, all of which will apply to them.

The Certification Regime
This covers, for FCA sole regulated firms, the SHF roles.

Significant Harm in this context means the ability to frustrate FCA consumer outcomes. These being the six outcomes under the heading of treating customers fairly.

Firms will appoint, assess and monitor 'certified individuals' themselves including a 'Fit and Proper' test.

All 'certified individuals' must be familiar with and abide by C-CON which is a code of conduct that replaces that in APER and the first five points relate to the non SMF 'certified individuals'.

Certificates of Fitness & Propriety or other similarly named certificates will need to be issued by firms for the individuals that they are certifying.

CR 1-5 apply to both SMF and CI (Certified Individuals, I got sick of typing it out).

SM1-4 applies additionally to SMF.

This chapter can be found in the FCA handbook.

Getting ready for the new regime
The FCA next consultation on extending the regime is not published but is due imminently. The rules are expected to start from January 2018 so firms should start preparation now. This needs to begin with an understanding of the new regime.

First of all, it is designed to improve the culture and governance within a firm and is not to be considered a tick box exercise and a "duty of responsibility" will apply. 

The objective is to get firms to comply with the spirit as well as the letter of the rules.

There will effectively be three tiers of personnel:

At the top
Senior Management Functions (SMF)
These will be approved by the regulator as now and have nine conduct rules to comply with.

In the middle
Certification regime - significant harm functions 
These are people with roles that could cause significant harm (to customers) (SHF). It is not completely clear whether or not advisers will fall into this category! Certainly some management roles will. Five conduct rules, which are similar to those for approved persons currently, will apply. These people will not be pre-approved by the FCA, firms will self-certify and check on compliance, fitness and propriety annually. There will need to be evidence of this.

This is something you can begin to do now – you should already be getting declarations of fitness and propriety for all staff, for these individuals you should instigate a process whereby their competency is also appraised and a certification document kept in the firm's records with an annual reminder to revisit this. A senior individual at the firm should be responsible and accountable for the certification regime within the firm.

4. Training Directory
All training modules purchased from our training directory, with that can be viewed here, we will automatically include our Learning to Learn package containing 5 online skills courses.

The cost of each module can be viewed here.


Wizard Learning Ltd

Provider of accredited online training and CPD system for financial advisers and financial services professionals.

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