The Senior Managers & Certification Regime (SM&CR) replaces the current Approved Persons Regime (except for Appointed Representatives) and will focus on firms’ governance arrangements and accountability. The SM&CR has been designed on the basis of proportionality where the requirements will apply differently to firms depending on the category the firm falls in.

What does your Firm need to do to comply with the SM&CR?

SM&CR will require you to undertake an in-depth analysis of your current organisational arrangements and assess how this new regime will impact your Firm. The responsibility of being ready and prepared for when the new regime comes into force lies with your Firm. The FCA have published detailed guidance of how the SM&CR should be adopted however, each firm is different. The FCA’s guidance includes:

  • How SM&CR applies to each type of firm, including Group and Branches
  • Assessing and reassessing fitness and propriety
  • Apportionment of responsibilities, including assessing the need for SMFs
  • Allocation of prescribed responsibilities
  • The creation and maintenance of responsibility maps
  • Considerations in assessing whether employees are carrying out certification functions
  • Application of conduct rules

The key challenges your Firm faces with the SM&CR

The SM&CR should not be a Compliance or HR initiative within your Firm. It is an enterprise-wide requirement across various parts of your business, leading to enhanced individual accountability that can only be assured collaboratively. Our experience from the deployment of the SM&CR to the banking world tells us that Firms need to be ready to face the following:

  • The process of becoming SM&CR compliant is not an overnight development
  • Long-established governance structures may need to be re-designed
  • Recruitment processes, particularly for SMFs can become protracted, with additional steps required such as DBS checks
  • Those carrying out SMF roles may want additional compensation for the perceived greater personal risk
  • Management information is often reconsidered to ensure that there is sufficient oversight across reporting lines
  • The annual certification process for certification functions requires a new process, which brings together information from multiple sources
  • Ongoing compliance assurance needs to be implemented to ensure the Firm continues to comply with the obligations of the SM&CR

Easing the burden of the SM&CR

We led numerous SM&CR implementation projects when the regime was first introduced in 2016 and continue to advise firms on the existing and forthcoming requirements.

Our experienced team of consultants can help your firm prepare, design and embed your SM&CR programme. We can:

  • Provide expert advice on how SM&CR will impact your business
  • Outline key actions and processes that are required by SM&CR
  • Project manage your SM&CR programme from design to implementation
  • Review your existing governance framework for enhancements
  • Support you in creating your Responsibilities Map
  • Updating policies and procedures to ensure compliance with SM&CR
  • Advising and reviewing management information design and distribution

What should you do now?

To find out how our SM&CR experts can help your Firm prepare and comply with this regime click here