The Senior Managers and Certification Regime: key issues for employment lawyers
Produced in partnership with Gillian Maclellan, Partner of CMS
The Senior Managers and Certification Regime: key issues for employment lawyers

The following Employment guidance note Produced in partnership with Gillian Maclellan, Partner of CMS provides comprehensive and up to date legal information covering:

  • The Senior Managers and Certification Regime: key issues for employment lawyers
  • The SM&CR—key principles
  • An overview of the key aspects of the Senior Managers Regime (SMR)
  • An overview of key aspects of the Certification Regime
  • Fitness and propriety (F&P) standards
  • Assessing fitness and propriety (F&P) on recruitment or appointment
  • Ongoing assessment of fitness and propriety
  • Where an individual is no longer considered fit and proper
  • The conduct rules
  • Impact of the SM&CR on disciplinary processes
  • more

The SM&CR—key principles

The Senior Managers and Certification regime (SM&CR) came into force on 7 March 2016.

It replaced the Approved Persons Regime (APR) in relation to UK banks, building societies, credit unions and PRA-designated investment firms, as well as UK branches of non-UK firms. These firms are regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) and compliance with the SM&CR is enforced by these bodies acting individually or jointly as appropriate (the regulator(s)).

The regime has three elements:

  1. Senior Managers Regime (SMR)

  2. Certification Regime (CR), and

  3. conduct rules

The three elements cover different parts of a firm's workforce.

Also on 7 March 2016, the Senior Insurance Managers Regime (SIMR) replaced the APR in relation to all UK-incorporated firms who fall within the scope of Solvency II, Directive 2009/138/EC, including insurance and reinsurance firms.

The rationale behind the SM&CR, its application and extension

The SM&CR was introduced following the Parliamentary Commission for Banking Standards’ 2013 report ‘Changing Banking for Good’. The regime is intended to ensure that individuals working in the sector exhibit high standards of conduct and are liable for any misconduct.

The SIMR replaced the APR in relation to all UK-incorporated firms who fall within the scope of Solvency II, Directive 2009/138/EC (the EU Directive that codifies and harmonises the EU insurance regulation) including insurance and reinsurance firms.