SM&CR categorisation for solo-regulated firms

We extended the Senior Managers and Certification Regime (SM&CR) on 9 December 2019 in a way that is proportionate to the size of the firm. Find out more about the different SM&CR categories for solo-regulated firms.

There are 3 categories for solo-regulated firms under the SM&CR.

  • Limited Scope: these firms will be exempt from some baseline requirements and will typically have fewer Senior Management Functions.
  • Core: firms in this tier will have to comply with the baseline requirements.
  • Enhanced: this will apply to a small number of firms whose size, complexity and potential impact on consumers or markets warrant more attention. These firms will have extra requirements.

You are responsible for determining which category you fall into, based on the rules. It is important to make sure you are correctly categorised, as your category determines how the SM&CR applies to you.

Reviewing your SM&CR categorisation

Some SM&CR categories are based on your permissions or the type of firm you are. For example, sole traders and all limited permission consumer credit firms are categorised as Limited Scope.

However, some SM&CR categories are based on regulatory data you have submitted to us via our Gabriel/RegData reporting system. If this information is incorrect, then you will need to resubmit this data to us as soon as possible for your SM&CR category to be reassessed.

There are 6 thresholds which will result in a firm being classified as Enhanced. Four of these thresholds are based on Gabriel/RegData returns. The table below shows what the thresholds are and what specific returns this information is based on.

If you believe your categorisation is incorrect, please review the relevant return/s and if the information you have provided us is wrong please re-submit where necessary. 

Please ensure you are aware of what unit you should be reporting your data in – this will be stated at the top of the return (for example, single units, thousands etc). If you do need to resubmit any returns, please be aware it can take up to 10 working days from when you submitted the data for our system to update your SM&CR categorisation.

If you believe that, despite your regulatory data being correct you have still been categorised incorrectly, please contact us.

SM&CR Category Reason System Source
Enhanced Assets under management of £50 billion or more calculated as a 3-year rolling average. Gabriel/ RegData FSA 038 field 1A
Enhanced Total intermediary regulated business revenue of £35 million or more per annum calculated as a 3-year rolling average. Gabriel/ RegData RMA B field 4E
Or;
If you are in retail intermediary who does not complete RMA-B please refer to the further information below
Enhanced Annual revenue generated by regulated consumer credit lending of £100 million or more calculated as a 3-year rolling average. Gabriel/ RegData CCR002 column B rows 1-6, 8, and 13-14
Enhanced Mortgage lender or administrator (that is not a bank) with 10,000 or more regulated mortgages outstanding at the latest reporting date. Gabriel/ RegData MLA-E Section E (2)
Row E4.5 column c3
Plus;
MLA-G
Row G1.1 (d) column c1

There are 2 other thresholds under the Enhanced SM&CR categorisation: 

  • Significant IFPRU
  • CASS large

Please review our Handbook Glossary to ensure you are aware of what each classification covers. If, after doing this, you still believe you have been categorised incorrectly, please contact us

Changing your SM&CR category

Some firms may choose to be categorised in the Enhanced or Core regime (‘opt up’), even if they are not automatically categorised in that regime under our rules.

More information is available in section 12 of the SM&CR Guide for solo-regulated firms (PDF).

Following submission of a Form O, if a firm changes their decision and wants to return to their original SM&CR category, they should submit another Form O notification on Connect, revoking their previous opt-up. This will take 12 months to take effect, during which time the firm must continue to meet the requirements of the SM&CR category they opted up to.

If a firm decides to withdraw their notification, they can only return to their original SM&CR category – for example, a Limited Scope firm that has opted up to Enhanced, cannot ‘opt down’ to Core. If they wanted to become Core, they would have to revoke their original Form O and submit a new one, opting up to Core.

Once firms have opted into the Core or Enhanced regime, they must comply with all its relevant rules. Failure to do so will be a breach of our rules. Firms can’t choose to apply elements of the regime ad hoc.

More information for specific firm types

We have provided additional information below for some firm types:

  • Oil Market Participants and Energy Market Participants
  • Retail investment intermediaries who do not complete RMA-B
  • Sole Traders

Oil Market Participants and Energy Market Participants

Oil Market Participants (OMPs) and Energy Market Participants (EMPs) are generally categorised as Core if their principal purpose is to carry on regulated activities, or if they are a MiFID investment firm.

If your firm’s principal purpose is to carry on activities other than regulated activities, and you are not a MiFID investment firm, you may be a Limited scope firm.

If you think you are a Limited scope firm, you will need to contact us.

Retail intermediaries that do not complete RMA-B

'Firms with current total intermediary regulated business revenue of £35 million or more per annum calculated as a 3-year rolling average' is 1 of the 6 Enhanced thresholds.

Non-RMA B firms with the relevant permissions are required to self-assess annually and notify us if they have (as a 3-year rolling average) over £35m in regulated revenue from the activities undertaken using the permissions below: 

  • retail investment activities 
  • advising on P2P agreements (except when carried on exclusively with or for professional clients) 
  • advising on pensions transfers & opt-outs 
  • arranging (bringing about deals) in retail investments 
  • home finance mediation activity 
  • insurance mediation activity (non-investment insurance contracts)

Once a non-RMA B firm no longer meets the £35m 3-year rolling average revenue threshold, it must notify us of this.

Notifications can be sent by email to [email protected].

Sole traders

Sole traders are Limited Scope firms. The only Senior Management Functions (SMFs) that normally can apply are SMF29 (the Limited Scope Function) and SMF16 (the Compliance Oversight function). If a sole trader doesn’t have employees, only the SMF16 Compliance Oversight function will apply. This function is only required if other rules require it or, in the case of CMCs, where the firm’s annual total income is £1m or above.

A few sole traders with employees may have a governance structure. In this case, the same SMFs apply as for firms in the Core category.

The Certification Regime does not apply to a sole trader as an individual, but may apply to their employees. So, the Certification Regime does not apply to a sole trader with no employees.

Most sole traders will not need to conduct a fit and proper assessment on themselves. This is because neither the governing SMFs nor the Certification Regime apply to a sole trader themselves, though these functions can apply to their employees.

Sole traders don’t need to get references about themselves from previous employers to perform a Senior Management Function as the sole trader. Firms do not need to request a regulatory reference for a candidate if they were previously a sole trader.

Sole traders do not need to conduct criminal records checks on themselves.

The Conduct Rules do not apply to a sole trader as an individual unless they hold an SMF. The Conduct Rules will apply to employees of sole traders (unless they perform one of the excluded ancillary roles).

Page updates

27/01/2021: Editorial amendment Minor house style updates
26/11/2020: Information added Further information for specific firm types
13/08/2020: Information added more information on categorisation