Under the Senior Managers and Certification Regime (SM&CR), does a senior manager need to be a director of the company? What is the criteria that the Financial Conduct Authority expect a company to comply with before appointment?

The Senior Managers and 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 firms identified as ‘SM&CR Firms’ in the decision tree in SYSC 23 Annex 1.1 and includes SM&CR banking firms, SM&CR insurance firms and various categories of SM&CR solo-regulated (eg FCA-only regulated) firms. Collectively these are referred to as SM&CR firms.

A firm’s classification determines the specific SM&CR rules which apply, this means that the requirements relating to senior managers differ depending on the type of SM&CR firm in question. All SM&CR firms must apply for and obtain regulatory approval prior to permitting an individual to carry out specific senior management roles, referred to as Senior Management Functions (SMFs).

A Director of an SM&CR firm, being a de jure director who has been properly