The Senior Managers and Certification Regime (SM&CR) replaces the Approved Persons Regime, changing how people working in financial services are regulated.
The aim of the Senior Managers and Certification Regime (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
We’re consulting on guidance for FCA solo-regulated firms preparing for the Senior Managers and Certification Regime (SM&CR). The purpose of the guidance is to give practical assistance and information to firms preparing Statements of Responsibilities and Responsibilities Maps.
Who it applies to
- Solo-regulated firms are those regulated by the FCA only. If your firm is currently regulated under our Approved Persons Regime, this will be replaced by SM&CR from 9 December 2019.
- Dual-regulated insurers are those regulated by both the FCA and PRA. The SM&CR replaced the revised version of our Approved Persons Regime and the PRA's Senior Insurance Managers Regime from 10 December 2018.
- 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. We have made some changes to the SM&CR for the banking sector which we published on 4 July 2018.
We have also applied the SM&CR to the FCA and published information about how we’ve done this.
Why regulations are changing
In response to the 2008 banking crisis and significant conduct failings such as the manipulation of LIBOR, Parliament 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.