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What is the Senior Managers and Certification Regime?

The Financial Conduct Authority (‘FCA’) and the Prudential Regulation Authority (‘PRA’) introduced the Senior Managers and Certification Regime (SMCR), initially in 2016 for banks, PRA regulated investment firms, building societies and credit unions. In 2019, the FCA extended the regime to all FCA solo regulated firms within the financial services sector, signalling the end of the Approved Persons Regime.

The principle of proportionality has been particularly important as the SMCR is extended to the broader range of firms operating in the financial services industry. This has meant a tailored approach by regulated firms in initially implementing the regime and now embedding it.

The Senior Managers Regime

Applies to those who hold the most senior roles

The Certification Regime

Applies to those who hold key roles at the firms but are not senior managers

The regulators have provided definitions of who would be subject to this part of the regime

The Conduct Rules

Applies to everyone (bar ancillary staff)

 

The PRA and FCA have issued rules and guidance to firms about how they should implement and adhere to the requirements.

Due to the nature of the SMCR a cross-Eversheds Sutherland/Konexo team combining both legal and consulting expertise has been established. This is a unique proposition for clients – We have worked with impacted clients as they implement and embed the requirements to provide assurance that they are meeting the requirements.

Key areas to think about:


Allocation of responsibility

HR implications - regulatory references, updating contracts

Reviewing current governance arrangements

Fit and proper assessments

Handovernotes

There are a number of elements to the SM&CR, in addition to mapping the new requirements, clients should start thinking now about their governance arrangements, and committee terms of reference and ensuring role profiles clearly set out the responsibilities.

There are a number of elements to the SMCR, in addition to mapping the requirements, clients should continue to review their governance arrangements, and committee terms of reference and ensuring role profiles clearly set out the senior manager responsibilities.

What we can do for you

We can provide pragmatic and sustainable solutions to your SMCR, governance, culture and conduct requirements in the following areas:

  • design, delivery and facilitation of Board level awareness workshops (including non-executive directors)

  • a governance gap analysis and governance structure review including a review of committee terms of reference

  • review of the Responsibilities Map in line with your business model

  • assessment of the relevance of the application of business activities and prescribed responsibilities to individual senior managers

  • review of the senior managers’ statements of responsibility linked to their role profiles

  • assessment of the application of the Certification Regime and identification of appropriate “significant harm” or “material risk takers” individuals

  • design and delivery of staff training and awareness

  • drafting and/or amendments to policies and procedures

  • work with your HR and legal teams to review employee contracts

  • provide interim legal and compliance professionals as well as project management resource