SMCR View - June 2021

We hope you had a lovely bank holiday break in this incredible sunny weather. It seems whenever we send out an SMCR View something else is published...here is a brief interim update on the outcome of the PRA/FCA's consultation on Senior Managers taking long-term (i.e. over 12 weeks), temporary leave which we discussed in our December 2020 SMCR View.

On 1 June 2021 the PRA published PS 11/21 following the FCA's publication of their Handbook Notice which broadly outlines that the PRA/FCA are implementing their proposals as consulted on. The changes being made come into effect on 2 June 2021.

Some interesting points to draw out:

• The 30,000 foot overview: Where a Senior Manager takes long-term temporary leave (e.g. parental leave or the firm are unclear when they will be back) and the firm plans to keep their role open for their return, the firm is not required to submit a Form C for the Senior Manager (i.e. removing them from the FS Register) or seek re-approval on their return. Instead, the firm should (1) submit a Form D in relation to the absent Senior Manager (which has been updated so there is a line on long-term absences) within 7 business days of the expiry of the 12 week rule period (if not before) and within 7 business days of the Senior Manager's return, (2) submit a Form J as the reallocation of the Senior Managers' responsibilities to others will be deemed "significant", (3) submit a Form A, as required, for the individual the firm is appointing to cover the absent Senior Manager's role on an interim period (we note it is expected that firms appoint another individual to perform the role for the interim).

• If a Senior Manager isn't coming back: If the firm become aware the individual is not returning to their role then they should notify the regulator with a Form C or Form E, as appropriate.

• Individuals covering for the SM: The PRA/FCA have noted that they are not going to fast track applications for those covering the Senior Manager on long-term leave. Instead, firms should be submitting applications ASAP to allow the PRA/FCA time to review the application.

• Fitness and propriety: If the period of long-term leave straddles the annual F&P assessment of the Senior Manager, the PRA/FCA's expectation is that the firm will still conduct the assessment, but without the input of the Senior Manager on long-term leave. It will be for the firm to consider whether the F&P assessment needs updating when the Senior Manager returns.

• Directory Persons: FCA has clarified that, for Directory Persons, if they are going on long-term, temporary leave and the firm is keeping the same role open for them, then the firm doesn't need to submit a notification to the FCA and the individual can continue to appear as active on the FS Register.

Associated guidance (e.g. SS 28/15 and SUP 10C) have been updated as has the Form J (see page 14 of the link which shows the changes made).

We hope this is helpful and we know a number of you will be grappling with long-term absences currently so do reach out if you need assistance. For any firms submitting Form As, our SMCR Toolkit has template Form A documents available.