On 4 July 2018, we published near final rules for how we plan to extend the Senior Managers and Certification Regime (SM&CR) to all dual-regulated insurers.
How it applies
We are extending the SM&CR in a way that is proportionate to the size of the firm. The requirements your firm needs to meet will depend 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 Firms
You should check which tier your firm belongs in by reading the Guide to the SM&CR for insurers.
To find out more about the regime, you can watch our overview of the SM&CR https://play.buto.tv/Nhdg5
Who it applies to
The SM&CR will apply to all insurance and reinsurance firms regulated by the FCA and the PRA.
- insurers and reinsurers
- the Society of Lloyd's
- managing agents
- UK branches of third-country firms and European Economic Area (EEA) firms
It will replace the Senior Insurance Managers Regime (SIMR) and the Revised Approved Persons Regime for insurance firms.
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 and how we will move firms and individuals to the new regime.
This includes details of the 3 key parts to the senior managers and certification regime.
The Conduct Rules
The Conduct Rules are intended to 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 will 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.
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.
Every Senior Manager will need to have a 'statement of responsibilities' that clearly says what they are responsible and accountable for. This replaces the existing 'scope of responsibilities' document required under SIMR but has a similar function.
Solvency II firms and large non-directive firms will also have to provide 'responsibilities maps' – these replace the current 'governance maps' but have a similar function.
The Certification Regime
The Certification Regime will apply to employees who aren't senior managers but 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 us, but firms will need to check and confirm ('certify') that they are fit and proper to perform their role at least once a year.
The extended regime will commence for insurers on 10 December 2018.
You may need to submit forms to us to convert your Approved Persons Regime functions (eg.CF10) to Senior Management Functions (SMFs). You should check if you need to submit forms by reading the Guide to the Senior Managers and Certification Regime for Insurers.
The main form for conversion is Form K. This form is for telling us which individuals who hold APR approvals will be converted to which SMFs. If you need to submit Form K, you must do so before midnight on 2 December 2018.
The other key form is Form J. You can use Form J from 10 December 2018 to assign a shared FCA-PRA Prescribed Responsibility, or a FCA-led Prescribed Responsibility, to an individual holding a PRA-led SMF. You can find out more information about PRA-led SMFs on the PRA website.