Senior Managers & Certification Regime

The Senior Managers and Certification Regime (SM&CR) was extended to all authorised firms on 9th December 2019, to replace the Approved Persons Regime.

It introduced different standards for different types of firm: the core regime, a baseline requirement applying to almost every firm; the enhanced regime, an additional set of requirements for larger firms (approximately 350) whose size, complexity and potential impact on customers warrants more attention; and the limited scope regime, which impacts all firms that used to apply the Approved Persons Regime on a limited basis, for example sole traders.

Who’s impacted by SMCR and how?

Senior Managers – anyone who undertakes a Senior Management Function – will have a Duty of Responsibility and a Statement of Responsibility but there is no need for a responsibilities map or handover procedures.

The Certification regime covers people who are not senior managers but whose job means it is possible for them to cause significant harm to the firm or its customers. For example, algorithmic trading, client dealing, CASS oversight etc. These individuals will not be approved by the FCA but the firm must ensure are certified as fit and proper on at least an annual basis.

Conduct rules apply to all employees except ancillary staff who do not perform a role specific to financial services. There are five high level obligations which apply to all, and an additional four obligations for senior managers.

All financial services firms should consider how their governance processes meet SMCR requirements

For anyone running a financial services firm, and who had approved person responsibilities under the old regime, the implications of non-compliance are severe. So, understanding the regulator’s expectations now the deadline has passed, and what this means in practice for your firm is key. Things to consider include:

  • Who are your senior managers and what are their core responsibilities?
  • Are these properly documented and can you articulate these clearly to the regulator?
  • Do your governance arrangements align with the new regime?

We can help you achieve and maintain SMCR compliance

We worked closely with clients to get ready for the regime in time, reviewing their SMCR project and project managing their SM&CR implementation. But SMCR didn’t finish on 9th December 2019. Whether you’re confident you got over the line, or feel you have more to do, we can help.

Guiding you through the trickiest areas of SM&CR

If you need SME advice on the regime, we will advise on how to implement the new requirements. We can also facilitate workshops to get the appropriate buy-in and engagement from key stakeholders (for example the SMFs) and help prepare and draft individual statements of responsibilities and management responsibilities maps.

SMCR health check

We can define and articulate the key processes to underpin the regime from scratch or assess your existing processes and documentation, including your governance framework and disciplinary processes, and suggest any required changes or refinements.

SMCR training

We can provide targeted training on senior management responsibilities, broader training on the new regime and what it means for individuals affected or get you staff at all levels in the business up to speed with the required conduct rules or provide. We can also offer practical tips to achieve and maintain compliance.