SMCR classification of a UK AIFM
An external UK AIFM starts as a core firm: the limited-scope list at SYSC 23 Annex 1 6.4R names no kind of AIFM. An exclusion sits in front of the enhanced scope tests.
A manager running private funds for professional investors and holding no wider permission is a core firm however large it becomes. The qualification conditions reach managers whose permissions go further: average assets under management of £65 billion or more on a three-year rolling average, calculated as total funds under management in FSA038; being a significant SYSC firm that also meets SYSC 23 Annex 1 9.3R; or being a CASS large firm. A firm may also opt up. One already meeting the 9.3R criteria that later becomes a significant SYSC firm becomes enhanced scope one year and three months afterwards, the window for building a responsibilities map.
Senior management functions at a core-firm AIFM
The governing functions in SUP 10C are chief executive (SMF1), executive director (SMF3), partner (SMF27) for an LLP and chair of the governing body (SMF9). The required functions are compliance oversight (SMF16) and money laundering reporting (SMF17), filled whatever the firm's size.
The six prescribed responsibilities of a UK core firm
SYSC 24 Annex 1 4.2R ticks six for a UK core firm: the senior managers regime, the certification regime, the Conduct Rules, financial crime, CASS, and allocation of responsibility for COLL compliance. Two behave unexpectedly.
Under SYSC 24.2.6R the financial crime responsibility may be given to the MLRO and need not be; allocated elsewhere, it expressly includes supervision of the MLRO. A firm assuming it sits with SMF17 has removed that supervisory layer without deciding to.
An AIFM that also acts as authorised fund manager, whose chair holds SMF9, has no discretion: a governance map placing COLL compliance with the compliance officer is wrong.
Responsibilities maps and the DEPP considerations
SYSC 25.1.1R applies the responsibilities map chapter to banking firms, Solvency II insurers and enhanced scope firms, so a core-firm AIFM needs none. DEPP 6.2.9-C lists five considerations in determining who was responsible for a failure; two are documents the firm designs.
| Consideration |
|---|
| The Statement of Responsibilities, and whether the role was executive or non-executive |
| The management responsibilities map, for enhanced scope firms |
| How the firm operated and allocated responsibilities in practice |
| The individual's actual role, by reference to minutes, emails, regulatory interviews, telephone recordings and organisational charts |
| The relationship between their responsibilities and those of other senior managers, including joint responsibilities and matrix structures |
Three are reconstructed from ordinary traffic, so at a firm with no map what matters is whether minutes record who decided and who challenged.
The certification population at an AIFM
SYSC 27 requires the firm itself, with no FCA pre-approval, to assess anyone performing a certification function as fit and proper on appointment and thereafter. A certificate is valid 12 months from issue and cannot be drafted to last longer, though it may expire sooner.
SYSC 27.8.15R defines material risk takers, for a firm within SYSC 19B.1, as each member of its AIFM Remuneration Code staff, so the remuneration identification and the certification population are one list; two that differ are an inconsistency on the firm's file. The territorial limitation narrowing most certification functions to UK activity does not apply to material risk takers at a UK SMCR firm, so Remuneration Code staff working entirely overseas remain inside the regime.