Selected Issue 6 - Summer 2019


What’s that coming over the hill? Is it a monster? No, it’s the Senior Managers

and Certification Regime (SMCR).

As you will know, the SMCR comes into force for firms authorised only by the FCA from 9 December 2019, and if you haven’t started planning your implementation yet, now is the time to start. We have produced a comprehensive Guide and recently updated it with the latest information we have available. You can find this on the extranet by visiting:

The regime is designed to be proportionate and what is needed stems from the type of firm you are: limited, core or enhanced. However, it would be wrong to underestimate the impact on a limited firm. For example, if you have individuals who will fall within the certification regime. A key aspect of your implementation will be the need for FCA forms to be submitted via Connect for current approved persons and the timing is tight from the earliest date for submission on 9 September and the end date being 24 November 2019. What is needed depends upon the type of firm you are and if the current control functions map across to the new senior management functions. Note the submission of forms are not for re-approval, but to clarify the allocation of prescribed responsibilities and senior management functions.

2019 are all different, the detail of the implementations will all differ.

When embarking on your implementation, it’s useful to reflect on where this change has come from, and why the current Approved Person Regime is being replaced for directly authorised firms. The roots can be seen in the financial crisis of 2007-9, which exposed deep systemic failures in governance and culture within banks and firms. Confidence in the financial markets was lost and Parliament was frustrated that individuals could not be held to account and they needed to bring about change and avoid future bailouts. Part of this change was a new regulator, the Financial Conduct Authority (FCA), which was set up on 1 April 2013 to take a different approach to regulation of financial services in the UK with a cultural and conduct agenda. SMCR is a key element of the conduct agenda and is changing how people working in financial services are regulated. Therefore at its core, SMCR is about culture and behaviour. The regime is designed to improve governance; hold individuals to account and secure better outcomes for consumers. Treating the implementation as a compliance issue is unlikely to bring about the changes envisaged. However much of the SMCR is good business practice and if embraced could bring benefits for firms of all sizes by improving transparency and more effective decision making. The legislation is aimed at ensuring responsibilities and accountabilities are clear; that skills and competence are evidenced; that conduct and behaviour are appropriate; fitness and propriety is evidenced and oversight & governance is appropriate. As the 47k firms falling under this regime on 9 December

If not handled appropriately, SM&CR implementation and ongoing compliance could introduce tension within the employee- employer relationship. Without the right governance frameworks and internal culture, senior managers may not have the confidence that they can take responsibility for the actions of the business areas for which they are responsible. It should be recognised also that regulatory change continues and what was acceptable and appropriate in years gone by is not necessarily appropriate now and it is important that this is recognised and individuals satisfied. Starting the conversations early will support a successful implementation.

Should you require support with your implementation plans, our team of highly skilled regulatory consultants are able to deliver SMCR readiness audits to help identify gaps and make recommendations to ensure you meet your regulatory requirements. If you would like further information on this service, please contact your Account Manager.

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