Senior Managers and Certification Regime: dual-regulated firms

The Senior Managers and Certification Regime (SM&CR) has applied to the banking sector since March 2016 and to dual-regulated insurers since December 2018.

How it applies

Banking sector

The SM&CR applies to all banking sector firms regulated by the FCA and the PRA. This includes:

  • banks
  • building societies
  • credit unions
  • UK branches of foreign banks
  • the largest investment firms regulated by the PRA and the FCA.

Insurers

The SM&CR applies to all insurance and reinsurance firms regulated by the FCA and the PRA. This includes:

  • insurers and reinsurers
  • ISPVs
  • the Society of Lloyd's
  • managing agents
  • UK branches of foreign insurers.

The requirements your firm needs to meet depends on whether your firm is a:

  • Solvency II Insurer or Large Non-Directive Firm (NDF)
  • Small Non-Directive Firm, Insurance Special Purpose Vehicle (ISPV) or Small Run-off Firm

Further information is available in the Guide to the SM&CR for insurers.

Guide to the SM&CR for insurers

The guide is a summary of our final rules and guidance on the SM&CR. It gives an overview of how the SM&CR works.

This includes details of the 3 key parts to the Senior Managers and Certification Regime.

Key features of SM&CR

There are 3 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') who perform key roles ('senior management functions') will need PRA or 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, Solvency II and large non-directive 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.

The Certification Regime

The Certification Regime applies to employees whose role means it's possible for them to cause significant harm to the firm or its customers. These roles are called 'certification functions'.

These people don't need to be approved by the FCA or PRA, but firms need to check and certify that they are fit and proper to perform their role at least once a year.

The Conduct Rules

The Conduct Rules set minimum standards of individual behaviour in financial services. By applying the Conduct Rules to a broad range of staff we aim to improve individual accountability and awareness of conduct issues across firms.

The Conduct Rules apply to almost all employees who do financial services activities, or linked activities, in a firm. Some Conduct Rules apply to all employees, while others only apply to senior managers.

Page updates

18/11/2019: Information added Embedded existing SM&CR video on page and added video transcript
20/03/2019: Document update Guide for Insurers - corrected information re: Compliance Oversight Function.