The Senior Managers and Certification Regime (SM&CR) replaced the Approved Persons Regime (APR) for banks, building societies, credit unions and dual-regulated (FCA and PRA regulated) investment firms in March 2016.
We have proposed on further changes to the SM&CR for the banking sector. The consultation on those changes closed on 3 November.
There are three key parts to the Senior Managers and Certification Regime:
- the Senior Managers Regime
- the Certification Regime
- Conduct Rules
The Senior Managers Regime
The most senior people ('senior managers') performing key roles ('senior management functions') need FCA approval before starting their roles.
Our Handbook and the PRA Rulebook set out which roles are senior management functions. Every senior manager needs to have a 'statement of responsibilities' that clearly says what they are responsible and accountable for.
There are some specific responsibilities that firms need to give to their senior managers, known as 'prescribed responsibilities'. This is to make sure there is a senior manager accountable for the SM&CR and key conduct and prudential risks.
A senior manager must also be responsible for each of the firm's business functions and activities. These responsibilities are called 'overall responsibilities'.
Banking sector firms must provide 'responsibilities maps' setting out the responsibilities of their senior managers, and their management and governance arrangements.
At least once a year firms need to certify that senior managers are suitable to do their jobs.
We are proposing some new changes to the Senior Managers Regime for banks, including:
- a new Prescribed Responsibility for the Conduct Rules, including ensuring staff are trained and that we are notified of breaches, where required
- changes to the way the '12-week rule' operates, allowing for temporary appointments of senior managers
- extending the partner senior management function to banks
The Certification Regime
The Certification Regime applies to employees who aren't senior managers but whose role means it's possible for them to cause significant harm to the firm or customers. These roles are called 'certification functions'.
These people don't need to be approved by us, but firms need to check and certify that they are fit and proper to perform their role. This has to be done at least once a year.
Our Handbook and the PRA Rulebook set out the roles that are certification functions.
The Conduct Rules
These are high-level standards of behaviour that apply to almost everyone in the banking sector. There are also some Conduct Rules that only apply to senior managers.
Firms need to make sure staff are trained in and know that the Conduct Rules apply to them, and to notify us when someone breaches a conduct rule.
We're proposing adding a new prescribed responsibility that all firms, including banking firms, will need to allocate to a senior manager, to make sure the firm trains its staff in the Conduct Rules and complies with our notification requirements.