Senior Managers and Certification Regime: Deadline Monday 7 March

The rule changes that introduce the Senior Managers Regime (SMR) and increase individual accountability of senior managers in the financial sector take effect on 7 March.

The new regime is designed to improve professional standards and culture within the financial services sector and will make it easier for firms and regulators to be clear about who is responsible for which aspects of an organisations core business areas and critical functions. The senior managers regime will also require allow senior managers to be held to account for any misconduct that falls within their area of responsibility.

Primarily, it will affect UK banks, UK building societies, UK credit unions, PRA regulated investment firms, and some third country firms. Although HM Treasury has announced that the SM&CR will be extended to all financial services firms by 2018.

The new regime has three main strands:

Senior Managers Regime (SMR)
The SMR focuses on the most senior individuals in firms who hold key roles or have overall responsibility for significant areas within a firm. Firms are required to identify these individuals and ensure that each has a statement of responsibility, a responsibilities map and has been pre-approved by the regulator before carrying out the role.
Certification regime
This will apply to ‘material risk takers’ and other staff who pose a risk of significant harm to the firm or any of its customers. The regime requires firms to certify that an employee is fit and proper to perform their function.
Conduct rules
These are high level rules that will apply directly to almost all staff. Rules will apply to the conduct of each individual in relation to the activities performed in their capacity as an employee or senior manager.

Firms must act now to ensure they have prepared a statement of responsibilities for senior managers setting out the areas for which they will be personally accountable. These statements of responsibilities should then be brought together under the firm’s responsibilities map.

Note that senior managers must either be pre-approved by the regulators by the March deadline or already have been grandfathered in as existing approved persons from 8 February 2016.
How can we help?
We can assist firms with:

  • organisational assessments;
  • certification assessments;
  • drafting responsibilities to be assigned;
  • preparing responsibilities maps;
  • fitness and propriety assessments;
  • SMR applications and grandfathering notifications;
  • SM&CR training for senior management;
  • SM&CR or conduct training for staff.
Please visit our website for more details about our services and involvement in this area, or feel free to contact Andrew Jacobs directly to discuss your firm’s arrangements.