Section 4: Making sure the right people are in the right roles

The Senior Managers Regime

The senior management part of the SM&CR applies to the most senior people who run your business, performing specific roles and responsibilities, called Senior Management Functions (SMFs) and defined by us. These people are called Senior Managers. An example of a Senior Manager in a core firm is a director (except a non-executive director). One person in your company can hold multiple SMFs. Anyone who carries out an SMF must be approved by the FCA for each function before starting, and our approval is specific to the individual.

Each Senior Manager must also have a 'Statement of Responsibilities'. This is a short document that clearly sets out what that person is responsible for, so that there is no uncertainty about who ‘owns’ key areas of your business.

If you are a ‘core’ SM&CR firm, you must also allocate ‘prescribed responsibilities’ to your Senior Managers. These are specific responsibilities that we set, which are usually related to ensuring that one person has responsibility for complying with certain sets of our rules. Limited scope SM&CR firms don’t need to apply these.

Your firm’s Senior Managers are also subject to a ‘duty of responsibility’. This means that if your firm breaches our rules in a Senior Manager’s area of responsibility, and they didn’t take reasonable steps to prevent or address it, we can take action against them personally.

The Certification Regime

The Certification Regime applies to people who are not Senior Managers, but whose roles could still cause significant harm to customers or the firm. The functions covered by the Certification Regime are not usually relevant to small credit brokers. In some cases, the significant management function may be relevant to larger firms.

The Conduct Rules

The conduct rules apply to all staff who work in your business, except those in ancillary roles such as cleaners and security staff, and set the minimum standard of behaviour that we expect from them. They’re based on the principles in section 1 of this guide, and require your staff to act with integrity, due skill, care, diligence, and to act to deliver good outcomes for consumers.  

You must train your staff on these rules and notify us of breaches where you have taken disciplinary action amounting to at least a written warning.

Fit and Proper

You must assess whether people in SMF roles are fit and proper before you apply for approval, and on an ongoing basis. If you are a core firm, you must also assess the fitness of someone you appoint as a director.  If the certification regime is applicable to you, you must also assess whether certification staff are fit and proper on an ongoing basis. There are three core areas that you must consider under these rules: 

• Whether the person acts honestly and ethically, has a good reputation, and any history of misconduct, criminal behaviour or regulatory action that might call their suitability into question. 
• Whether the person has the skills, experience and knowledge needed for the role, has received appropriate training, and can carry out the role effectively. 
• Whether the person’s financial position raises concerns about their reliability or judgement or creates risks that could affect how they perform their role.