On 17 July 2020, the FCA published Consultation Paper 20/10: Extending implementation deadlines for the certification regime and conduct rules (CP20/10).
HM Treasury will lay a Statutory Instrument (SI) before Parliament to delay the deadline to the certification regime until 31 March 2021. The delay is intended to give firms significantly affected by the COVID-19 pandemic the time to make the changes they need.
In CP20/10 the FCA sets out proposed amendments to its rules to effect the changes being introduced by the SI. The FCA proposes that for solo regulated firms that are not benchmark administrators, the deadline for the following requirements will be extended from 9 December 2020 to 31 March 2021:
- The date the conduct rules come into force, for staff who are not senior managers or certification staff.
- The date by which relevant employees must have received training on the conduct rules (this automatically follows from the extension in the previous bullet point).
- The deadline for submission of information about Directory Persons to the Register.
- References in FCA rules to the deadline for assessing certified persons as fit and proper.
The FCA believes that the majority of firms will not need to use this extension. If firms are able to complete certification assessments, conduct rules training and Directory Persons reporting by the original deadline, the FCA encourages them to do so, provided that they can do so without compromising the quality of their assessments or training.
The FCA has also added in CP20/10 some additional guidance about how the certification regime applies during the transitional period, if a firm chooses to certify staff before the new 31 March 2021 deadline.
The FCA proposes to extend the implementation deadlines for claims management companies (CMCs) by an equivalent period. This would mean that a CMC receiving full authorisation on or after 9 December 2019 would have just over 15 months after the date of its full authorisation to fulfil the requirements set out above.
The certification regime and reporting of Directory Persons do not apply to benchmark administrators, the proposals in CP20/10 are not relevant to these firms. Benchmark administrators have until December 2021 to train non-senior manager staff in the conduct rules, so the FCA does not consider that the current crisis will prevent effective implementation of the conduct rules training in these firms. The FCA is not proposing to extend this deadline.
The FCA is not proposing to change the deadline by which firms need to complete conduct rule breach reporting. Firms need to make an annual notification about conduct rules, even if there haven’t been any breaches. Most firms will submit their first annual report in October 2021, so the FCA does not think that an extension is required. However, the reporting period would change, as firms only have to report relevant breaches following commencement. Firms would only need to report relevant breaches that occurred from 31 March 2021. Limited permission consumer credit (LPCC) firms will report in line with their reporting year, alongside their annual return, but the earliest date at which any LPCC would report would be 31 May 2021.
The FCA proposes making a corresponding extension to the deadline for training staff in the conduct rules and reporting Directory Person data to 31 March 2021. Extending the deadlines will ensure they remain consistent and will provide extra time for firms that need it, and enable them to deliver effective training on the conduct rules.
The FCA will still publish details of certified employees of solo firms starting from 9 December 2020 on the Financial Services Register, as firms submit them to it. Where firms are able to provide this information before March 2021, the FCA encourages them to do so.
The deadline for comments on CP20/10 is 14 August 2020