The Certification Regime currently requires firms to certify many mid- and upper-level staff – not just SMFs – as ‘fit and proper’ every year. This includes people in significant harm functions (roles that may pose risk to customers or the firm).
What’s Being Proposed?
- Remove the Certification Regime from law. Parliament’s repeal will give the FCA and PRA the chance to redesign a replacement regime through rules.
- Smaller scope: Expect a reduction of about 15% in roles requiring certification at first, by cutting unnecessary duplication.
- Annual certification obligation under review: The burden of annual recertification is likely to be replaced by a more proportionate, risk-based approach – details subject to later consultation.
- Firms may be given more discretion: Assessment and record-keeping rules could become less prescriptive, provided outcomes are met.
Why This Matters
- Certified persons will still need clear evidence of fitness and propriety, but the processes may become less rigid and time-consuming.
- The PRA and FCA have not signalled any intention on their part to scrap the principle of ongoing certification, but firms they have intimated that firms will be trusted to exercise judgement in maintaining compliance.
Summary for Firms
You will retain responsibility for certification but will soon have fewer roles and more flexibility in processes. If you’re unsure how your significant harm functions will be classified, or want to streamline your certification and monitoring, Leaman Crellin can assist.
