Senior Managers and Certification Regime

What is SMCR?

The Senior Managers and Certification Regime (SMCR) replaces the Approved Persons Regime for all FCA-regulated firms from 9 December 2019, changing how people working in financial services are regulated.

The focus is on greater accountability and increased responsibility.

What does SMCR entail?

Each FCA-regulated business will need to: 

• Senior Managers:  Identify senior managers (see below) and prepare written statements of responsibility (SoRs) for them.  Senior managers will be personally accountable to the FCA for matters within their SoR.
• Certification Regime: Identify staff carrying out roles with a significant impact on customers, the firm and/or market integrity and certify on joining and annually that they are fit and proper to carry out their role (effectively taking over this function from the FCA)
• Conduct Rules: Ensure that staff comply with the FCA's Conduct Rules (including rolling out training)
• Regulatory References: obtain and provide references going back 6 years (or longer in some cases) for certified staff and senior managers.

This is backed up by obligations to report various matters to the FCA.

What is the goal of the SMCR?

The FCA doesn’t intend firms to change how they organise themselves or hire people to fill specific functions - the intention is to clarify and reinforce what effective governance looks like.  The key goals are:

• Encourage staff to take personal responsibility for their actions
• Improve conduct at all levels
• Make sure firms and staff clearly understand and can show who does what

Who needs to comply?

SMCR already applies to banks and insurers but from 9 December 2019 this is being extended to cover solo-regulated firms.

Solo-regulated firms are those regulated by the FCA only. If your firm is currently regulated under our Approved Persons Regime, this will be replaced by SMCR from 9 December 2019. This is anyone from a sole trader to large enterprise - approximately 47,000 firms!

There are three categories under the SMCR:

• Limited scope: this will apply to firms who already have exemptions under the Approved Persons Regime. These firms will be exempt from some baseline requirements.
• Core: firms in this tier will have to comply with the baseline requirements. Most firms will fall into this category
• Enhanced: this will apply to a small number of firms whose size, complexity and potential impact on consumers or markets warrant more attention. These firms will have extra requirements.

If unsure you can use the FCA firm checker tool.

CHECK YOUR FIRM

What is a Senior Manager?

Under the SMCR, 'senior managers' are individuals who perform one of the senior management functions designated by the FCA. These replace the 'significant influence functions' under the old regime. Senior Managers will need to be approved by the FCA to carry out their senior management function. Other staff currently requiring FCA approval will now be covered by the Certification Regime.

What is the directory?

This will be a public register of all persons working in financial services organisations regulated by the FCA. This will include details of all past employment and any relevant qualifications. The aim of this is to increase transparency in the industry and consumer confidence.