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Senior Managers and Certification Regime

Insights into the regime's extension across the financial services industry

The widely anticipated Financial Conduct Authority’s (FCA) Consultation Paper CP 17/25 containing proposed rules for extending the Senior Managers and Certification Regime (SMCR) was released on 26 July 2017. Explore our insights into what this means for your firm.

This extension will apply SMCR to all Financial Services and Markets Act (FSMA) authorised firms, including asset managers, investment firms, insurers and consumer credit firms. The Prudential Regulation Authority (PRA) have separately consulted on the extension of SMCR to all insurers in CP14/17 (effectively replacing the current Senior Insurance Managers Regime). The implementation date for the extension is currently unknown although likely to be in summer 2018, as indicated by CP 17/25. The SMCR will have a market‑ and firm‑wide effect, however this paper will be of most use to Senior Managers and individuals responsible for implementation programmes.

 

A shift in focus towards greater individual accountability

We have seen that many firms have been surprised by the shift in regulatory focus towards greater individual accountability that has happened over the past few years, and as a result have been slow to adapt to the new expectations and requirements of regulators. Firms will need to start taking action now to be ready for the increased scrutiny. New challenges will impose significant operational requirements on firms, both in implementation and as on‑going business as usual activities. Preparation will be required to ensure sufficient resources are available in the middle and back office to support the transition.

 

Key messages

The final requirements of the extended regime are still subject to consultation. To assist businesses in readying themselves for this new regime, this paper offers:

  • An overview of the proposed changes outlined in the FCA consultation.
  • Lessons learned from our experience implementing the SMCR within the banking industry. 
  • Key tasks that firms need to focus on to ensure that they are ready for commencement of the SMCR.

To find out more about responding to the Consultation Papers and implementing the proposed rules please contact one of the team below.

You can also learn more about our earlier report on the Senior Managers Regime here.

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