Good news for all General Counsels – or at least a stay of execution. On 27 January 2016, the Financial Conduct Authority (FCA) published a statement clarifying its intentions with respect to individuals having overall responsibility for a legal function under the Senior Managers Regime (SMR).
Since the publication of its final rules in July 2015, there has been a degree of uncertainty as to whether such individuals require approval under the SMR. Concerns were also raised that an approval requirement might result in a General Counsel being required or pressured by regulators to disclose privileged information. In recognition of the genuine issues which exist, the FCA has confirmed that:
- it will consult on the matter; and
- in the interim, as there will not be sufficient time to consult properly before the regime comes into force on 7 March 2016, firms that have made decisions in good faith about whether or not approval is needed, on the basis of existing rules and other communications, will not be required to change their approach.
But beware. Once the consultation is complete, the situation may change, although the FCA promises to make the situation clear and provide information on any transitional measures that may be needed for firms to adjust their arrangements.