SM&CR—one minute guide

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

  • SM&CR—one minute guide
  • The Senior Managers Regime and Certification Regime—what is it?
  • When was the SM&CR introduced and who does it apply to?
  • The key requirements of the SMR
  • Rules and guidance relating to the SM&CR
  • SM&CR—what should firms be doing?
  • Policy development
  • Impact of Brexit
  • Impact of coronavirus (Covid-19)

SM&CR—one minute guide

The Senior Managers Regime and Certification Regime—what is it?

The Senior Managers, Certification Regime (SM&CR) and Conduct Rules for individuals in financial services firms aim to increase individual accountability in the sector. The Senior Managers Regime is a key priority for the Financial Services Authority (FCA) and the Prudential Regulation Authority (PRA) as the regulators believe effective governance and individual accountability is fundamental to effective regulation. The framework encourages individuals to take greater responsibility for their actions which should in turn make it easier for firms and regulators to hold individuals to account.

The regime has three key elements: the Senior Managers Regime, the Certification Regime, and the Conduct Rules:

  1. the Senior Managers Regime (SMR)—the SMR focuses on individuals performing a senior management function (SMF) specified by either regulator, on behalf of a relevant firm whether physically based in the UK or overseas. The SMR imposes obligations on firms’ most senior decision makers

  2. the Certification Regime (CR)—this applies to all employees of relevant firms who are not senior managers who could pose a risk of significant harm to the firm, its reputation or any of its customers (for example, staff who give investment advice). Such individuals do not need to be pre-approved by the regulators. Instead, firms certify that these individuals are fit and proper to perform their roles on an ongoing basis

  3. Conduct

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