Last Wed, the FCA published its near final rules for the extension of SMCR to solo-regulated firms. Alongside, it published a range of other documents, including the equivalent for insurers a consultation on a new “Directory” of financial services workers and Guides to the new regime.

We will shortly post a more detailed look at what the industry can expect from SMCR, and more will become clear over the coming months. For now, here are five areas where, reading carefully between the lines, I think we can be reasonably confident about the FCA’s approach in practice, although even here areas of uncertainty remain:

1. Implementation is Brexit-dependent: I’ve argued all along that when and how the FCA implements SMCR will be heavily influenced by the course and pace of Brexit. This shows itself most obviously in the implementation date itself. Originally timed for 2018, only the new requirements for insurers will sneak under the bar for this year. Meanwhile, the date for extending SMCR to solo-regulated firms has moved inexorably back from spring 2019, through summer, to December next year. Given the course of Brexit so far, it would not be a shock if SMCR is pushed into 2020 but this was as far as the FCA could go for now.

2. Culture leads deterrence (for now): The rhetoric from the FCA is all about using the SMCR accountability regime, especially the Conduct Rules, to improve firms’ culture. Since its birth in 2013, the FCA has been looking for a framework on which to pin its approach to culture and, not unreasonably, has identified SMCR as the best option available. However, the origins of the regime lie in the financial crisis and the Parliamentary Commission on Banking Standards. This implies a more enforcement-led approach and seeing SMCR, primarily, as a tool to enable regulators to take enforcement action against senior managers individually. There is more to come on this as enforcement cases emerge from the FCA’s pipeline.

3. Two speed approach: The slow burn element of SMCR is demonstrated in the stretched implementation timetable, with Day 1 for solo-regulated firms now 9 December 2019, with the first certifications due a year later. However, in line with using SMCR as a culture framework, and reflecting that the regime has already been in place for deposit takers and (partially) for insurers since 2016, supervisors are likely to start applying SMCR on the ground much sooner than the timetable implies, probably by this time next year.

4. Certification the sting in the tail: This has been evident for a while, but it is now clear that medium to large firms who don’t make Certification central to their thinking on overall implementation are likely to pay for it later. The requirement to notify the FCA annually that its certified staff are fit and proper was always going to be a long-term burden for larger firms. The FCA’s intention to create a Directory of financial services staff, putting this process in the public domain, makes the pressures associated with it more acute.

5. “Spirit” of SMCR as important as the letter (but questions remain): At the briefing it held this Wednesday, the FCA was clear it is looking for firms to behave in the “spirit” of the new regime and not treat it as tick box compliance. This makes absolute sense, but does rely on the FCA's ability to deal effectively with a wide range of firms whose approach is likely to look anything but consistent to a sceptical supervisor. In reality, much of this will be contextual. Is the firm Enhanced? Has there been a conduct failure? What do their “peers” do? How open is the firm's dealings with the regulator? And so on…

Last week’s publications were a definite step forward, and the initial Policy chapter of the SMCR story is all but complete. And firms have a reasonable degree of detail, and the time needed, to implement the regime. To get SMCR right, firms will need to start looking beyond December 2019, and start considering (if they haven’t already) the impact SMCR will have on their strategy, culture and operating model.