Covid19 & the FCA's expectations of the firms it regulates: Act now, don't pay later

The FCA has recently published guidance about their expectations of how firms meet their SMCR related obligations during Covid19. 

It is vital that FCA regulated firms are aware of this useful statement and are doing what needs to be done, as failure to do so would be storing up trouble for once the lockdown ends.

Whilst many firms will have their SMCR obligations and record keeping in hand, with lockdown in place, markets volatile, business operations disrupted and the only short-term certainty being uncertainty persisting, senior managers at FCA regulated firms may feel that they do have the time, capacity or inclination to look at yet another headache at this time. But the FCA's statement seems a clear indication of intent to conduct a drains up once lockdown ends. 

The most important section of the entire statement is where the FCA discusses their record keeping expectations for firms. Record keeping isn't just an administrative exercise, but the way in which firms (and individuals at those firms) can demonstrate their fulfilment of their legal obligations to the FCA during lockdown and beyond. Especially now, at a time when the FCA cannot physically visit firms, we can expect the regulator to be looking to place a great emphasis on retrospectively checking firms' records after the lockdown ends. 

The FCA's record keeping expectations tell us three things: 

(1) the FCA expects there to be clarity "so that everyone understands who is responsible for what"; 

(2) the FCA expects firms to keep a "running commentary of their Senior Manager population and their responsibilities during this period" – in other words, if it isn't written down now, firms won't be able to tell the FCA later that it happened; and 

(3) the FCA is clearly telling firms to expect a request for these records once the lockdown eases, in that these records "should be available if we request it – now or in the future".