The FCA has published Policy Statement 16/3: Strengthening accountability in banking: Feedback on CP15/22 and CP15/31 and final rules on extending the certification regime to wholesale market activities and interim rules on referencing (PS16/3).
In PS16/3 the FCA sets out feedback and its response to extending the Certification Regime to wholesale market activities for both UK Relevant Authorised Persons (UK RAPs) (banks, building societies and credit unions) and non-UK RAPs and its final rules for the territorial scope of the Certification Regime and Conduct Rules for material risk takers (MRTs). Key changes to the FCA’s original proposals include:
- in relation to the Client Dealing Function the FCA has reverted to the existing Handbook Glossary definition of ‘client’ for the territoriality test;
- in relation to MRTs the FCA has removed the territorial limitation for UK RAPs only. Practically, this means that if a UK RAP identifies a staff member as an MRT, then they are subject to the Certification Regime irrespective of geographical location or interactions with clients;
- the reference to “material” has been removed from the new Algorithmic Trading Function; and
- a transitional period of 6 months which gives firms until 7 September 2016 to identify staff who are carrying out either the Client Dealing Significant Harm Function (SHF) or an Algorithmic Trading SHF and to train the staff in respect of the Conduct Rules.
In PS16/3 the FCA also provides a response to the feedback on Consultation Paper 15/31: Strengthening accountability in banking and insurance – regulatory references (CP15/31). In CP15/31 the FCA stated that it wanted the final rules on regulatory references to be in place for 7 March 2016. However, the FCA feels that this will now not be possible given the complexity of the concerns raised. The FCA now aims to deliver the final policy and rules in the summer. The final rules will be accompanied by a transition period to allow firms to implement the changes. The existing referencing rules for RAPs and insurers will be retained from 7 March 2016. This is to ensure that the existing requirements remain in place whilst the regulator considers the feedback to its proposals.
View Policy Statement 16/3: Strengthening accountability in banking: Feedback on CP15/22 and CP15/31 and final rules on extending the certification regime to wholesale market activities and interim rules on referencing, 4 February 2016