Senior Managers and Certification Regime—essentials for SM&CR banking firms
Senior Managers and Certification Regime—essentials for SM&CR banking firms

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Senior Managers and Certification Regime—essentials for SM&CR banking firms
  • Background to the Senior Managers and Certification Regime
  • Statutory framework of the SM&CR
  • PRA and FCA approach to the Senior Managers and Certification Regime
  • Who falls within the scope of the Senior Managers and Certification Regime?
  • The Senior Managers Regime
  • Certification Regime
  • Fitness and propriety
  • Conduct rules
  • Regulatory references
  • more

As a result of failings in the financial services sector which contributed to the 2008 financial crisis, the UK Parliamentary Committee on Banking Standards (PCBS) was established in 2012 to consider professional standards in the UK banking sector. The PCBS recommended improving genuine accountability in firms. In response, the Senior Managers and Certification Regime (SM&CR) was created to increase individual accountability and raise standards of governance in order to help restore consumer confidence in the financial services sector and strengthen market integrity. The introduction of the SM&CR marked a fundamental shift in the PRA and FCA’s approach to regulating individuals.

The constituent parts of the SM&CR are:

  1. Senior Managers Regime (SMR): Capturing, as a minimum, members of a firm’s board, the SMR requires the PRA or FCA to approve Senior Managers performing a Senior Management Function (as defined by the FCA or PRA), whether in the UK or overseas. Senior Managers have ultimate individual responsibility within the firm for a defined area of UK business

  2. Certification Regime (CR): The Certification Regime applies to those employees who are not Senior Managers, but who could nonetheless pose, in the regulators’ view, a risk of ‘significant harm’ to the firm, its customers or market integrity. Firms themselves are required to certify, at the outset and on an annual basis, those members of staff who