The Senior Managers and Certification Regime (SM&CR) replaces the current Approved Persons Regime, changing how people working in financial services are regulated.
The aim of the new SM&CR is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence. As part of this, the SM&CR aims to:
- encourage a culture of staff at all levels taking personal responsibility for their actions
- make sure firms and staff clearly understand and can demonstrate where responsibility lies
SM&CR is already in place in the banking sector. We’re extending the SM&CR to cover insurers and solo-regulated firms (those firms regulated only by us) and proposing some changes to the current banking regime. We're also considering how we can best make information about certified staff publicly available.
We carried out a supervisory review of SM&CR for banks and published a report on the Statements of Responsibilities (SoRs) and responsibilities maps we received. We have also published information about how we have applied SM&CR to the FCA.
Why regulations are changing
In response to the 2008 banking crisis and significant conduct failings such as the manipulation of LIBOR, the government set up the Parliamentary Commission for Banking Standards (PCBS) to recommend how to improve standards in the banking sector.
PCBS recommended a new accountability framework focused on senior management. It also recommended that firms take more responsibility for employees being fit and proper, and that there be better standards of conduct at all levels in banking firms.
Based on these recommendations, Parliament passed legislation in December 2013, leading to the FCA and Prudential Regulation Authority (PRA) applying the SM&CR to the banking sector.
Parliament made further changes to legislation in May 2016, requiring us to extend the regime to all FSMA authorised firms.
This means we’re now extending the SM&CR to cover insurers and solo-regulated firms (those firms regulated by the FCA only, not the PRA) as well as banks.
If you’re regulated by the FCA only (solo-regulated)
If your firm is currently regulated under our Approved Persons Regime, this will be replaced by SM&CR.
If you’re an insurer
If your firm is a dual-regulated insurer, you are currently subject to a revised version of our Approved Persons Regime and the PRA's Senior Insurance Managers Regime. Alongside the PRA, we propose building on this framework and introducing all elements of the SM&CR to insurers.
If you’re in the banking sector
The SM&CR already applies to UK banks, building societies, credit unions, branches of foreign banks operating in the UK and the largest investment firms regulated by the PRA and the FCA.
However, as part of extending the SM&CR to cover all FSMA-authorised firms, we’re proposing some changes that will affect the banking sector.