- The Senior Managers and Certification Regime, SM&CR was initially introduced on 7th March 2016 applying predominately to the Banking sector and certain large investment firms.
- The Regime has since been extended to Insurance firms and Insurance intermediaries from 10th December 2018.
- The new regime aims to bring forth a cultural change, seeking to increase individual accountability at senior manager level for those responsible for key decision making in the firm.
- SM&CR becomes effective for Asset Managers and all other solo regulated firms on December 9th 2019.
There are three main elements to SM&CR:
1 – Senior Managers Regime, SMCR:
- Firms must identify their Senior Managers and allocate certain Prescribed Responsibilities to them.
- The Senior Managers require must be approved by the FCA.
- Additionally, the firm must retain a Statement of Responsibilities for each approved person together with a responsibilities map outlining the accountable person responsible for the core prescribed responsibilities.
- SM&CR introduces a statutory duty of responsibility for all Senior Managers to take reasonable steps to prevent and detect regulatory breaches from occurring in their respective areas of responsibility.
- Provides the opportunity for more precise enforcement by regulators against Senior Managers for their failings to take reasonable actions in the event of a contravention.
- The firm is also obliged to ensure that proper handover procedures are in place for approved persons.
2 – Certification Regime: Firms are required to assess and certify on an annual basis on the fitness and propriety of their senior managers ensuring that the approved person remains competent to undertake their responsibilities effectively
3 – Conduct Rules: All staff (other than ancillary staff, such as receptionists or security) will be subject to conduct rules and firms will need to provide training on those rules. Prescribed set of conduct rules applying to all, Tier 1 level rules apply to all employees and Tier 2 level applying to those in Senior Management Functions.
- March 2016 – Applies to Banks and certain large investment firms
- 10th December 2018 – Applies to Insurance and Insurance Intermediaries
- 9th December 2019 – Applying to Asset Managers and all FCA authorised firms not previously covered, firms will have 12 months by which to certify senior managers fitness and probity and train employees in the new Conduct Rules.
- Whitepaper – Financial Crime Prevention – Know Your Management Responsibilities under SM&CR
- Whitepaper – Senior Management and Certification Regime – the new politics?
- Whitepaper – The Senior Management and Certification Regime: Individual Accountability = Individual Liability
- News – The Senior Management and Certification Regime – Calling All Insurance Firms, are you ready for December 10th 2018?
- Blog – The New Senior Management and Certification Regime – Are you taking reasonable steps?