Senior Managers and Certification Regime: solo-regulated firms

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 solo-regulated firms. Solo-regulated firms are regulated by the FCA only. Dual-regulated firms are regulated by the FCA and the PRA.

Who it applies to

This extension affects almost every firm we regulate, from very small firms and those with limited permissions (including sole traders and limited permission consumer credit firms) to some of the largest global firms.

The SM&CR will apply to all FSMA authorised firms. It also applies to branches of non-UK firms with permission to carry out regulated activities in the UK.

The SM&CR replaces the Approved Persons Regime so will apply to all firms who are currently subject to the Approved Persons Regime.

How it applies

We are extending the SM&CR in a way that is proportionate to the size of the firm. If you work for a solo-regulated firm, you should check which tier of the regime applies to you. This will determine the steps you need to take to prepare.

There are 3 tiers under the SM&CR:

  • 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.
  • Limited scope: this will apply to firms who already have exemptions under the Approved Persons Regime. These firms will be exempt from some baseline requirements and will typically have fewer senior management functions.

Which tier applies

The first step in preparing for SM&CR is to find out which tier of the regime your firm belongs in. You can do this by either using the firms checker tool below or by reading the Guide to the SM&CR for solo-regulated firms.

Firm checker tool

Guide to the SM&CR for solo-regulated firms

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 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.

The Certification Regime

This 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 won't need to be approved by us. Instead, firms will need to check and confirm ('certify') that they are fit and proper to perform their role at least once a year.

Timeframe

The Treasury sets the timetable for implementation of the regime. They have announced that SM&CR will commence for solo-regulated firms on 9 December 2019.