Under the Senior Managers and Certification Regime (SM&CR), solo-regulated firms need to tell us whether disciplinary action has been taken against individuals, who aren't Senior Managers, for Conduct Rules breaches. See how this applies to your firm.
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The SM&CR has applied to the majority of solo-regulated firms since 9 December 2019.
There are 3 components to the SM&CR:
- the Senior Managers Regime
- the Certification Regime
- the Conduct Rules
The Conduct Rules set standards of personal conduct against which we can hold people to account. They apply to all employees of solo-regulated firms, except for certain ancillary staff who are specifically excluded (read pages 45-46 of the SM&CR guide for FCA solo-regulated firms PDF). In this context, 'employee' is defined more broadly than its usual meaning and generally includes groups such as volunteers, contractors and temporary staff.
Read more in chapter 11 of the Guide (PDF).
Annual Conduct Rules reporting requirement
The SM&CR introduced an annual Conduct Rules reporting requirement. The report is called REP008 and it should be completed and submitted using RegData.
Firms need to report whether they have taken disciplinary action against individuals who are not Senior Managers for breaches of the Conduct Rules and, if so, the details of the breach.
This includes:
- details about the individual who has committed the breach
- details about what Conduct Rules have been breached
- details about the disciplinary action taken
Disciplinary action means:
- issuing of a formal written warning
- suspension or dismissal of a person
- reduction or recovery of remuneration (clawback)
Firms must submit REP008 annually even if there haven’t been any Conduct Rule breaches resulting in disciplinary action. Firms that don’t submit REP008 by the reporting deadline will be charged a late return fee of £250.
When to submit REP008
Firms need to submit REP008 within 2 months of the end of the reporting period. The date REP008 is due depends on whether the firm is a Limited Permission Consumer Credit firm (LPCC). Learn more about whether a firm is LPCC.
- LPCC firms need to submit REP008 within 2 months of their accounting reference date, or the next business day if this falls on a weekend.
- All other solo-regulated firms need to submit REP008 by 31 October, or the next business day if this falls on a weekend.
The reporting period covers a full year:
- For LPCC firms, the reporting period is the firm’s annual financial reporting period ending on its accounting reference date.
- For all other solo-regulated firms, the reporting period for REP008 is 1 September to 31 August.
Who to include in REP008
Conduct Rules breaches by Senior Managers should not be included in REP008. Instead, disciplinary action for Conduct Rule breaches against Senior Managers must be reported on Connect using Form D or Form C (where the individual no longer performs a Senior Management Function). Read page 48 of the Guide (PDF).
Disciplinary action for Conduct Rule breaches by all other individuals must be included in REP008.
Firms are only required to report disciplinary action for breaches of the Conduct Rules for individuals who were subject to the Conduct Rules at the time the breach occurred.
The Conduct Rules applied to the following individuals from the start of the SM&CR on 9 December 2019:
- Senior Managers
- Certification Staff
- Directors of UK SM&CR firms who are not Senior Managers
Under our transitional arrangements, the Conduct Rules only started to apply to all other employees - except ancillary staff - from 31 March 2021. Read page 54 of the Guide (PDF).
After 31 March 2021, disciplinary actions for breaches of the Conduct Rules by all individuals who are subject to the Conduct Rules (apart from Senior Managers) should be included in REP008. If a firm doesn’t have any individuals who are subject to the Conduct Rules (other than Senior Managers), then the firm must submit a nil return in REP008.
Appeals against disciplinary action
If a firm takes disciplinary action for a Conduct Rule breach but the employee appeals, or plans to appeal, this should still be reported to us in REP008 and the notification should include the appeal.
The firm should update us on the outcome of the appeal in the following year’s REP008.
Sole traders
The Conduct Rules do not apply to a sole trader as an individual unless they hold a senior management function (SMF).
The Conduct Rules apply to employees of sole traders (unless they perform one of the excluded ancillary roles). Any breaches resulting in disciplinary action by non-SMF employees should be reported in REP008.
If a sole trader has no employees, the firm must submit a nil return in REP008.
Personal data provided in REP008
REP008 is reported via RegData for the majority of firms, and the information given to us is held for 25 years within the reporting system.
We may analyse the information we receive to help inform our supervisory activity (as noted in our Approach to Supervision (PDF) and in PS18/14).
For information on how we use personal data for our supervisory work, please see our privacy notice.