The Senior Managers and Certification Regime (known as its abbreviation SM&CR or SMCR) replaces the Approved Persons Regime, which in turn changes how people working in financial services are regulated. The Senior Managers and Certification Regime is part of the UK regulators’ drive to improve accountability and governance culture within financial services organisations. The SM&CR will be extended to cover all other FSMA-authorised firms on 9 December 2019.

In response to the 2008 banking crisis and many significant conduct failings in the finance sector, Parliament set up the Parliamentary Commission for Banking Standards (PCBS) to recommend how to improve standards in the banking sector. The PCBS recommended a new accountability framework focused on senior management. It also recommended that organisations take more responsibility for employees being fit and proper, and that there be better standards of conduct at all levels in banking firms. Based on these recommendations, Parliament passed legislation in December 2013, leading to the FCA and Prudential Regulation Authority (PRA) applying the SM&CR to the banking sector. Parliament made further changes to legislation in May 2016, requiring the SMC regime to be extended to all FSMA authorised organisations.

The aim of the Senior Managers and Certification Regime (SM&CR) is to reduce harm to consumers and strengthen market integrity by making organisational individuals more accountable for their conduct and competence.

As part of this, the aim of SM&CR is to:

1.encourage a compliance culture of employees at all levels taking personal responsibility for their actions

2.make sure organisations and employees clearly understand and can demonstrate where responsibility lies

The SMCR will affect the most senior management, with board members (or equivalent) and those who have significant influence, or the ability to cause significant harm to a firm’s business, being assessed and registered as falling within the Senior Managers requirements; or alternatively they may fall within the Certification Regime requirements.

Alongside the SMCR, the FCA also proposed introducing its Conduct Regime (CR) to these same firms. The CR impacts the vast majority of staff at a regulated firm and requires adherence and observation of certain prescribed standards of conduct as staff go about their daily employment. The CR must also be observed by those included within the SMCR definitions described above. Given the timeline now in place, it is essential that key individuals take action within their organisations to meet SM&CR and CR aims within the current timeline.

By ensuring your employees read & comply, you are taking another step on the road to meeting SMCR objectives. By ensuring that you have a strategy in place quickly to support SMCR you are doing a great deal to protect yourself and your organisation from future outcomes. Therefore take a look at both Orchestra Read & Comply and Orchestra Compliance Plus. Taking responsibility for your actions begins with reading and compliance.  

Call us on (UK) 020 7 788 9445 to see how Orchestra can help you support SM&CR aims quickly.