UCL Faculty of Laws


UCL Laws academics submit response to FCA consultation on Senior Manager and Certification Regime

15 April 2019

'A Response to the Financial Conduct Authority’s Consultation Paper CP19/4’ outlines our disagreements with the FCA’s proposal on the Senior Manager and Certification Regime.

FCA entrance

A team from the UCL Centre for Ethics and Law (UCL CEL) at UCL Laws (Trevor Clark, Teaching Fellow; Professor Richard Moorhead, Chair of Law and Professional Ethics; Dr Steven Vaughan, Associate Professor; and Dr Alan Brener, Deputy Director of UCL CEL) has submitted a response to the Financial Conduct Authority’s consultation paper CP19/4 ('Optimising the Senior Managers & Certification Regime’).

The FCA proposes to exclude the head of the legal department of banks, insurance companies and other regulated firms from accountability under the Senior Manager and Certification Regime (SM&CR). In the response, the UCL team outline their disagreements with the proposal, principally on public interest grounds, arguing that head of legal accountability under the SM&CR will promote effective risk management and help prevent wrongdoing within regulated firms.

The response challenges a number of the FCA’s assertions in CP19/4. For example, that the dominant function of in-house lawyers within regulated firms is as providers of narrow legal advice which does not constitute an “activity” for the purposes of SM&CR. The response highlights how this contention understates and misrepresents the importance of legal advice to regulated firms; the far wider range of activities undertaken by in-house lawyers in operationalising legal work within regulated firms; and the broad and operationally important role played by the head of legal and the legal function as a ‘line of defence’ in regulated firms.

The response also highlights that the FCA’s apparent objective as reflected in CP10/4 of protecting legal professional privilege (LPP) in the context of regulatory investigations is in marked contrast to that of the Serious Fraud Office, which has publicly stated its concern that LPP may be used as a shield to mask wrongdoing.

The paper concludes by calling for the FCA to make the reasons for their policy choices proposed in CP19/4 clearer.

Read the response in full


Professor Richard Moorhead, r.moorhead[at]ucl.ac.uk, 07963 612 005

Image: Financial Conduct Authority building, © FCA