MFA and AIMA Submit Comments on Application of Senior Managers Regime to Legal Function
January 4, 2017
On January 4, MFA and AIMA submitted a comment letter to the UK Financial Conduct Authority in response to the FCA’s discussion paper on the application of the Senior Managers Regime (SMR) to the legal function of covered financial institutions. While the discussion paper addressed application of the SMR to banks, the letter noted the asset management industry’s interest given the expectation that the SMR will be extended to asset management firms going forward. In the letter, we expressed concern with applying the SMR to the in-house legal function of a covered firm because we believe it would unnecessarily create conflicts, undermine the independence of the legal function, and create other difficulties. To the extent the FCA determined to apply the SMR to the legal function, we encouraged the FCA to provide clear guidance to the industry, in particular with respect to distinguishing management responsibilities from legal advice and the protections for privileged communications.