Are you performing a “Temporary UK Role”?

The first step for any firm which wishes to comply with the SM&CR is to properly classify its staff.?Different classifications of staff result in different application of the SM&CR rules.

A number of exemptions and exclusions exist under the SM&CR.?This can result in certain individuals being out-of-scope for some, or all, of the rules.

One of the main exemptions is for staff who are performing a “Temporary UK Role” (also known as the “30-day rule”).?More specifically, anyone who is performing a function that would otherwise be a Certification Function but is acting in a “Temporary UK Role” is out-of-scope for the purposes of the Certification Regime.?As a result, these individuals are not subject to any of the requirements of the Certification Regime, such a fit and proper testing, regulatory references or the FCA Directory.?It’s important to know how the exemption operates to ensure that overseas staff aren’t accidentally snared in the SM&CR.?In particular, firms must ensure that overseas staff aren’t operating in a way that would require them to undergo periodic fit and proper testing if, in practice, there are no internal processes in place to ensure that this is the case.

So, what is the “Temporary UK Role” exemption?

The “Temporary UK Role” exemption must be seen within the overall territorial scope of the Certification Regime, as detailed in SYSC 27.3.1R.?This is summarised in diagram form below.?The essential take-way is that the “Temporary UK Role” exemption is only available and useful to individuals based outside of the UK who are working for firms (whether UK SMCR firms or Overseas SMCR firms) who would be performing Certification Functions if based and operating in the UK.

Unpicking the situation in more detail, we can see that anyone who would satisfy the territorial requirements of the Certification Regime, will be exempt from its requirements if:

1. that person (the “overseas person”) is based outside of the UK; AND
2. in any 12-month period, the overseas person spends no more than 30 days performing what would otherwise be a Certification Function; AND
3. the overseas person is “appropriately supervised” (there is no guidance as to what this term means) by (a) one of the firm’s Senior Managers, or (b) one of the firm’s Certification Employees whose fit and proper certificate covers the function that the overseas person would otherwise be performing; AND
4. the overseas person is NOT giving advice or performing related activities in connection with (a) pension transfers, pension conversions or pension opt-outs for retail clients, or (b) membership of a Lloyd’s syndicate; AND
5. the overseas person is not performing the function of a “Material Risk Taker”.[1]

The FCA expects that any overseas person looking to benefit from the “Temporary UK Role” exemption is accompanied on a visit to a customer in the United Kingdom.[2]

In SYSC 27 Annex 1, the FCA provides helpful examples of how the “Temporary UK Role” exemption works in practice.?The examples are set out below, but the main take-aways are that:

1. An individual must be based in a non-UK office to be able to take advantage of the exemption.
2. If an individual performs more than one function that would otherwise be considered to be a Certification Function, the 30-day rule does NOT apply separately to each Certification Function performed – it is a single 30-day annual allowance.
3. The allowance is 30-days per annum.?It is not 30*24 = 720 hours per annum.?If an individual claiming the exemption deals with a UK client on one day, that uses up a ‘full day’ of the 30-day allowance (however long or short the duration of the actual client contact on a given day).
4. The 30-day limit is monitored over ANY consecutive 12-month period.?For example, it does not run from one calendar year to the next.

The “Temporary UK Rule” is there and available for all firms to use to their advantage.?It’s important to know how it operates.?It’s more important to know where its limits lie.?Remember, Section 63E(1) of FSMA requires firms to take reasonable care to ensure that no employee of the firm performs a Certification Function unless the employee has a valid fit and proper certificate.?Don’t trip over this rule purely on account of a lack of understanding as to how the “Temporary UK Role” exemption works in practice.?To help you avoid this bear trap, we’ve tried to capture all of its moving parts in the flow diagram below.?Hopefully, this is useful.?If you have any questions – on the “Temporary UK Rule” or SM&CR more generally – drop us a line at [email protected].?We’re here to help.

The “UK Temporary Role” exemption

[1] SYSC 27.5.3R

[2] SYSC 27.5.5G