SM&CR—FCA and PRA Fitness and Propriety requirements
Produced in partnership with John Drabble of Kemp Little LLP

The following Financial Services practice note produced in partnership with John Drabble of Kemp Little LLP provides comprehensive and up to date legal information covering:

  • SM&CR—FCA and PRA Fitness and Propriety requirements
  • Overview of fitness and propriety requirements for SM&CR firms
  • Application
  • SM&CR Firms
  • Senior Management Functions
  • Certification Functions
  • Fitness and propriety requirements
  • FSMA 2000—assessing fitness and propriety
  • FCA—fitness and propriety (FIT)
  • The application of FIT
  • More...

SM&CR—FCA and PRA Fitness and Propriety requirements

The Senior Managers & Certification Regime (SM&CR) is the Financial Conduct Authority’s (FCA) and Prudential Regulation Authority’s (PRA) framework for regulating individuals in the financial services sector. The SM&CR applies to all SM&CR firms.

SM&CR firms are required to assess the fitness and propriety of individuals as a precursor to permitting them to carry out certain roles, and on an ongoing basis. This assessment is commonly referred to as the ‘fit and proper test’. In respect of certain senior roles, firms are also required to obtain regulatory approval prior to permitting the individual to carry out a role; under FSMA 2000, s 61(1), the regulators will only grant an application for approval if they are satisfied that a candidate is fit and proper to perform the relevant function. The burden rests on applicant firms to convince the regulators that individual candidates are fit and proper. For further information on applications, see Practice Note: SM&CR: Applications to perform SMFs, notifications, and withdrawal of approval.

In determining whether or not an individual is fit and proper, FSMA 2000, s 61(2) sets out the matters to which the regulators may have regard. The FCA has set out guidance on this in the FIT chapter of the FCA Handbook and the PRA in the fitness and propriety chapters of the PRA Rulebook. The

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