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- Robert Bell
SMF Applications: Changes to the process?
Those who have recently made an application to the FCA in relation to a Senior Management Function, whether the application is for a new appointment (Form A) or for a variation of responsibilities (Form J), will be aware of the FCA’s change in approach to reviewing such applications.
Applicants are now very much put to the test. A comprehensive review of the completed form and supporting documentation, such as the fit and proper assessment, training needs gap-analysis and training plan is now undertaken, more in line with the way in which we thought the FCA would act when they first came into being, and then again when SM&CR was introduced. Third time lucky I suppose.
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The new, rigorous approach is clear from the applications we have submitted, with two standout areas of difficulty. Firstly, it is far more difficult to gain approval where the senior manager lacks relevant experience. For a new application this can be leading a regulated firm or for a variation of senior management function it may be a lack of experience in that particular area. We’ve certainly seen this with those applying for the SMF17 role as a Money Laundering Reporting Function where individuals not suitably qualified have been taken to task during the interview process.
Previously those applying were able to satisfy the regulator’s expectation through outlining their training plans, as long as the plans clearly mitigated the gaps identified in the skills analysis. However, we’re increasingly seeing the FCA require evidence that the training has taken place already, citing the need to be “ready and willing.” Courses may be “in-house,” via a provider or formal qualifications, the regulator does not stipulate or appear to favour any particular method. If you find yourself in this position, speak to us as we can help you to evidence the training you require.
The second area of difficulty is where firms did not get it right the first time. Historically the FCA was constructive in such situations, almost coaching the applicant through the process. This seemed sensible to us, as it was almost always not the quality of the applicant which was the issue but a misjudgement of the process itself. What is now clear is they expect applications to be right first time, taking the thoroughness of the submission as part of the judgement of the individual’s skills and experience. In fact, the FCA appear to be taking pride in the number of rejections stating that they are “strengthening our authorisation gateway so firms need to meet a higher standard before we authorise them; as a result, we’ve increased the proportion of applications that we refuse, reject or which applicants withdraw to one in seven (up from one in thirteen)” in their 2022-25 strategy.
You’re right to ask yourself what you should do. A great starting point is to download our SMF application pack. For only £150 you will get a good sense of the form and content of documents you’re required to submit, and when you consider that you don’t get your fee back if the application is rejected, it’s a small price to get you on the right track. Once you have completed the forms, feel free to ask us to review them for you. The pack can be found here.
Incidentally the FCA is actually improving the way that form A forms work, essentially to streamline the process and make it simpler for applicants.
Key points, as cited by the FCA:
a helpful checklist of information you need to complete your application before you start
less duplication in the employment history section – if you're a solo-regulated firm, you can input 10 years of employment history instead of uploading a CV
improved data validation and pre-population to help you fill in your application quicker
the Statement of Responsibilities (SOR) is integrated into the Form A, so you don't need to complete a second application for this
removal of the 'Send later' function
improved help and guidance throughout
easier navigation and an improved layout
new questions on rights to work in the UK, previous names being displayed on the Register, candidate time spent on activities and time spread across Directorships (where necessary)
improved virus scanning on attachments
Further information can be found here.
