PS4/23 - Moving Senior Managers Regime forms from the PRA Rulebook

1. Overview

1.1 This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses to consultation paper (CP) 2/23 – Moving Senior Managers Regime forms from the PRA Rulebook. It also contains the PRA’s final policy, as follows:

• amendments to the Insurance - Senior Managers Regime – Applications and Notifications Part of the PRA Rulebook (Appendix 1);
• amendments to the Non-Solvency II Firms – Senior Managers Regime – Applications and Notifications Part of the PRA Rulebook;
• amendments to the Large Non-Solvency II Firms – Senior Managers Regime – Applications and Notifications Part of the PRA Rulebook (Appendix 1); and
• amendments to the Senior Managers Regime – Applications and Notifications Part of the PRA Rulebook (Appendix 1);

1.2 This PS is relevant to all PRA-authorised firms, including credit unions. Forms submitted before the final policy takes effect would be unaffected.

Background

1.3 In CP 2/23, the PRA proposed to:

• amend the Senior Managers Regime – Applications and Notifications Parts of the PRA Rulebook (as set out in the Overview section) to remove links to Senior Managers and Certification Regime (SM&CR) forms A (long form), A (shortened form), B, E, I, J, and the statement of responsibilities; and
• amend the length of employment history required in the form A (long form) from five years to 10 years.

Summary of responses

1.4 The PRA received nine responses to the CP. The majority of respondents agreed with our proposals, however some respondents raised concerns, observations and requests for further clarification. This is set out in Chapter 2.

Implementation

1.7 The rules will take effect on Thursday 11 May 2023.The SM&CR form A (long form) will be updated to increase the length of employment history in due course and simultaneously with the update of the Connect system.

2. Feedback to responses

2.1 Before making any proposed rules, the PRA is required by FSMA to have regard to any representations made to it, and to publish an account, in general terms, of those representations and its feedback to them.^{footnote [1]}

2.2 The PRA has considered the responses received to the CP. This chapter sets out the PRA’s feedback to those responses, and its final decisions.

2.3 The sections below are structured according to the two proposals in the CP. The responses in the first section have been grouped according to the general topic of the responses.

Removing Senior Managers Regime forms from the PRA Rulebook

2.4 The PRA proposed to remove links to forms A (long form), A (shortened form), B, E, I, J, and the statement of responsibilities from the PRA Rulebook.

2.5 Four respondents made comments about how they will be notified about changes to Senior Managers Regime (SMR) forms and how they will be able to keep track of form changes. Two of those respondents were also concerned that there may be a difference of opinion as to what constitutes a significant change, and stated that it is important that firms have an opportunity to respond to suggested future proposals. One of those respondents therefore thought the forms should remain in the Rulebook, and all changes be consulted on.

2.6 Having considered the responses, the PRA has decided to implement the change as proposed in CP2/23. In addition to publishing a PRA Direction notice of form changes on the SMR section of the Bank of England website, the PRA will enhance the visibility of any future form changes that are not consulted on by including a message in the monthly Regulatory Digest, informing readers of form changes. Where possible the PRA will include the message ahead of the form changes taking effect. Any changes to the SMR forms applicable to dual regulated firms will be made in conjunction with the Financial Conduct Authority (FCA) and changes will be reflected in both the online and paper versions of the forms. This means that form changes will be included in the alerts section of FCA’s Connect system. Additionally, the PRA is open to receiving feedback and suggestions on any of its authorisations forms. For SMR forms, such feedback can be sent to PRA-ApprovedPersons@bankofengland.co.uk.

2.7 In response to the concerns about the interpretation of what represents a significant change, the PRA clarifies that where a change would result in an additional burden for firms, or represents a change in policy, the PRA will continue to consult. This could include adding new questions or changing the substance of questions, eg increasing the length of employment history, but the PRA would need to use its judgement in deciding whether to consult. In making that judgement, the PRA would liaise with the FCA. Changes to the layout or ‘look’ of the forms or changes to addresses or punctuation would not be considered significant and would not be consulted upon.

2.8 Four respondents asked that downloadable versions of the forms remain available. Two of those respondents requested for blank template forms to be downloadable from the Connect system and also suggested that the SMR forms not available on Connect should be made available.

2.9 The PRA will continue to make downloadable blank template forms available on the SMR section of the website. Blank template forms cannot be downloaded from the Connect system. The dynamic nature of the Connect forms means that certain sections are shared between different types of form and selecting particular answers opens or hides other sections of the form. This makes it costly and difficult to make a blank version of the forms available from Connect. Alongside the FCA, the PRA will continue to consider and evaluate the feasibility and costs of improvements to the Connect system, including adding more forms to it.

2.10 One respondent asked if the rules allowing paper applications to be submitted in certain circumstances, for instance where Connect is unavailable, will continue to apply. One respondent asked if the SMR forms in the FCA Handbook would also be updated to reflect the change to the length of employment history required.

2.11 The rules allowing a paper application to be submitted in certain circumstances are unchanged, and the paper forms are available on the SMR page of the Bank of England website. The PRA and FCA will continue to update all the form sources (ie PRA website, FCA website, and Connect) as quickly as possible so that the questions asked are identical. The ‘look’ of the forms will differ between those available on the Connect system and the paper forms.

Changing the length of employment history required in the form A (long form)

2.12 The PRA proposed to increase the length of employment history required in the form A (long form) from five years to 10 years. No respondents raised any concerns, and five respondents were supportive of the proposal to increase employment history to 10 years. The PRA has decided to implement the change as proposed in CP2/23.

2.13 Three respondents asked for confirmation that there is no impact on the six-year regulatory reference requirements as a result of CP2/23. The PRA confirms there is no impact on the six-year regulatory reference requirement.