Senior Manager Function SMF Handover Policy | Procedures and Document | Assessing Fitness and Competency for SMF Roles | FCA Handbook | Template for FCA Applications and Authorised Firms

1 Policy Statement

[Your Company Name]’s (hereinafter referred to as the “Company”) are committed to ensuring that we abide by the regulations applicable to our business type and activities. This policy document outlines our intent and objectives for ensuring thorough and compliant handover procedures relating to any person within our business who has approval under section 59 of the Act to perform a designated senior management function. Such person shall be referred to in this document as an SMF Manager and will be recorded in this document as holding such a position.

This policy aims to comply with the standards and regulations held under section SYSC 25.9 of the FCA Handbook and deems it necessary that any person carrying out, being trained for or in consideration of holding an SMF Manager role, is provided with the materials, knowledge and resources to carry out such role as applicable to the business needs and regulatory requirements.

The company are dedicated to ensuring that all staff in a supervisory and/or manager role are properly trained, staffed, resourced and supported with the intention of enabling them to perform their stated job role and responsibilities completely, compliantly and transparently.

The company confirms that we have and always do take every reasonable step and measure to ensure that: –

1. a person who is becoming an SMF manager;
2. an SMF manager:
   a. taking on a new job or new responsibilities; or
   b. whose responsibilities or job are being changed; and
3. anyone who has management or supervisory responsibilities for the SMF manager in (1) or (2);

has, when the SMF manager starts to perform his new or revised responsibilities or job, all information and materials that a person in (1) to (3) could reasonably expect to have to perform those responsibilities or that job effectively and in accordance with the requirements of the regulatory system.

2 Purpose

Where a person is due to start or take over a manager role define by the FCA as being a Senior Management Function (SMF), we have a duty of care to ensure that any such person is provided with adequate training, information, materials, time and resources to undertake, complete, understand and assess the role and responsibilities fully. This policy therefore sets out our objectives and intentions for preparing a person for an SMF role, including any pre-training, handovers and/or temporary appointments. This endeavours that the company remain compliant with the SMCR regulations and are also confident in our SMF Managers abilities to perform their roles and responsibilities as per our and regulatory standards.

This policy also details who the SMF Managers are currently, the date at which they were appointed to their SMF role and their signature of confirmation that they have been provided with all necessary training, resources, information and materials as relevant to the SMF Manger role.

3 Scope

This policy relates to all staff (meaning permanent, fixed term, and temporary staff, any third party representatives or sub-contractors, agency workers, volunteers, interns and agents engaged with the company in the UK or overseas) within the organisation and has been created to ensure that staff deal with the area that this policy relates to in accordance with legal, regulatory, contractual and business expectations and requirements.

4 What Is an SMF Manager?

The FCA defines an SMF Manager as: –

“(in relation to a relevant authorised person) a person who has approval under section 59 of the Act (Approval for particular arrangements) to perform a designated senior management function in relation to the carrying on by that relevant authorised person of a regulated activity.”

Firms must submit an application via the FCA’s Connect System for individuals to hold a Senior Management Function (SMF). Firms must undertake sufficient due diligence to satisfy themselves on the appropriateness of the applicant before submitting the application and provide evidence to support this. Such evidence should include (but is not limited to): –

• Due diligence checks undertaken by the firm in appointing the candidate
• Regulatory references and a DBS check
• The firms’ details and rationale, used to appoint the candidate to an SMF role

It is also essential that all SMFs comply with and meet the fit and proper test for approved Senior Managers as set out in section 61 of FSMA on an ongoing basis. Under the FSMA, the FCA must identify and ensure that any person it approves is fit and proper when it comes to their ability to perform a Senior Management Function, their personal and business integrity, their competence and capability.

5 Objectives

The company has set out the below objectives in relation to our SMF handover and preparation procedures. These objectives are further supported by our FIT assessments, SMF checklist and due diligence questionnaire, recruitment, selection & induction policies and our training and development program.

Any person holding an existing SMF role or where a new or newly appointment person is made a supervisor or manager in a Senior Management Function role, the company will ensure that: –

• We take any and all reasonable steps to ensure that, prior to taking on the SMF role and responsibilities, the SMF has all information and materials that a person in such a role could reasonably expect to have to enable them to perform those responsibilities or that job effectively and in accordance with the requirements of the regulatory system
• We will provide any person taking over an SMF role, with a procedure backed handover period in which a ‘SMF Handover Document’ will be used to update, reassure, train, notify and inform the person of their responsibilities, duties and expectations
• We always comply with the FCA Handbook regulatory requirements
• We will always have a working and up to date SMF Handover Policy containing information on how we comply with the requirements set out in SYSC 25.9, including the systems and controls that we use for handovers
• We always make and maintain adequate records of the steps taken to comply with SYSC 25.9 and with our own objectives and obligations
• We will assist, inform and support all SMF managers with their new or revised responsibilities and roles
• Contained in the ‘SMF Handover Document’ information, we will always ensure that the newly appointed person to any SMF role is provided with: –
  • Details and information about unresolved or possible breaches of the requirements of the regulatory system
  • Details of any unresolved concerns expressed by the FCA, the PRA or another regulatory body
  • A practical and helpful document that can be used to competently undertake the position
  • Information and material that instantly enables them to see and assess what issues should be prioritised and addressed first
  • All possible information relevant to the role and responsibilities, which will include judgements and opinions in addition to the necessary facts and figures
• Where the responsibilities or job is being taken over from another person, we have written procedures and arrangements for an orderly transition period
• Such transition arrangements include (but are not limited to): –
• • Taking reasonable steps, where possible, to ensure that the predecessor contributes to the information and material in the ‘SMF Handover Document’ and in the training and transition period of the new SMF manager
  • That the roles predecessor is given the due time and consideration to put forward their opinions, judgments and expertise for the betterment of the incoming SMF manager
  • The use of a handover checklist to ensure that all information, materials and training have been provided and are fully understood by the incoming SMF manager

6 SMF Handover Procedures & Document

[NOTE: It is a regulatory requirement that you have written handover procedures for all SMF roles combined with a handover document for each function which includes training, information and materials needed to take over the role. As this is specific to each role and firm, we have not provided a template for the procedures or document, as you will be required to develop this yourself. However, you can use the below as a foundation on which to add in your handover procedures and for developing a template handover document for each SMF role.]

As SMF Managers and associated senior personnel are responsible for ensuring that the firm complies with its obligations under the regulatory system, we provide a detailed ‘SMF Handover Document’ to any person undertaking an SMF role, ensuring that they have the appropriate, compliant and necessary information and materials to complete their tasks.

This includes, but is not limited to, the assessment and periodic review of the effectiveness of all the policies, arrangements and procedures put in place to ensure that they comply with the firm’s obligations under the regulatory system and to take appropriate measures to address any deficiencies.

For the purposes of this document and any other reference to SMF, the company defines SMF as: –

• Any position that requires one or more regulatory requirements to be met
• Gives the responsible person supervisory, management or temporary oversight of a regulatory area and/or over staff completing tasks with regulatory implications
• Management of any key business area
• Complaint Handling Manager
• Compliance Manager
• Any person responsible for making decisions and/or suggestions about regulatory functions or key business requirements
• Any other area as outlined or made specific by the FCA and/or PRA
• [Add/delete as applicable]

The company uses the below structure in our SMF Handover Procedure document, which ensures that the objectives and aims laid out in this policy and in SYSC 25.9 are complied with.

• Background checks and thorough due diligence audits are carried out on the selected candidate prior to being offered the SMF role.
• Alongside the requirements to fill an SMF role, we also assess the candidate against the Approved Peron’s criteria, ensuring their integrity, honesty, expertise and suitability for the position.
• The candidate is then submitted via application to the FCA for approval.
• We use a 4-week transition period for newly appointed persons to SMF roles, whereby the predecessor to the role and new manager work side-by-side.
• We use a SMF Handover Document and Checklist to ensure that all information, materials and responsibilities applicable to the SMF role are used, trained on and understood by the incoming manager.
• Methods used during the handover period include: –
  • 1:1 coaching
  • Mentoring and shadowing
  • Assessments and knowledge tests
  • Workshop sessions
  • On the job training
• Prior to any handover completion, the newly appointed SMF manager is assessed and tested on their knowledge and understanding on the SMF role they are undertaking and of the relevant FCA regulatory requirements.
• Where possible, the predecessor will continue to shadow the new SMF manager for 2 weeks and be on-hand to answer any questions during this time – where the predecessor is no longer with us, the Compliance Officer or alternate Senior Manager will fill this role.
• Monthly reviews are undertaken by senior management and/or Directors for the first 6-months to ensure compliance and a firm understanding of the role is being maintained.

We understand that it is our responsibility to ensure the competence and suitability of all SMF staff within the business to reduce the risks to consumers and to prevent compliance failures. We take this responsibility seriously and endeavour to train, support and teach those in SMF roles at all stages and on a continual basis.

7 Assessing Fitness and Competency for SMF Roles

The FCA may only grant an SMF Manager status where it is satisfied that the individual is fit and proper to perform the senior management function/s for which they are applying.

The company utilises several assessment criteria for confirming that the candidate is suitable and competent to take on an SMF role, including: –

• honesty, integrity and reputation
• competence and capability
• previous relevant experience
• current job role
• qualifications
• assessments and fit for purpose tests
• discussion with Compliance Officer and other SMF Managers

Refer to our FIT Assessment Template and SMF Due Diligence Forms for further information.

8 Responsibilities

The company will ensure that all SMF Managers are provided with the time, training and support during their handover period, enabling them to learn, understand and comply with the objectives in this policy, any associated document and the relevant regulatory requirements.

It is the overall responsibility of the Directors/Owners of the company to ensure that they and all other SMF Managers, along with any Approved Persons, meet the FCA’s regulations and requirements for competence and suitability prior to performing or being selected for the role.