{"id":63018,"date":"2023-07-02T20:04:28","date_gmt":"2023-07-02T20:04:28","guid":{"rendered":"https:\/\/lgca.uk\/?p=63018"},"modified":"2023-07-02T20:04:28","modified_gmt":"2023-07-02T20:04:28","slug":"the-senior-managers-and-certification-regime-smcr","status":"publish","type":"post","link":"https:\/\/lgca.uk\/el\/the-senior-managers-and-certification-regime-smcr\/","title":{"rendered":"The Senior Managers and Certification Regime (SM&CR)"},"content":{"rendered":"

Introduced in the UK from 2016 by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), the Senior Managers and Certification Regime (SM&CR) is a regulatory framework designed to enhance the accountability and conduct of individuals working in the financial services industry.<\/p>\n

SM&CR replaced the Approved Persons Regime (APR) that applied to certain senior\/approved persons at regulated firms (and in the case of insurance firms, it replaced the Senior Insurance Managers Regime or SIMR). It delineates the roles and responsibilities of senior managers and demands that they take appropriate measures to prevent regulatory breaches in their areas of responsibility.<\/p>\n

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The three k<\/strong>ey <\/strong>p<\/strong>illars of SM<\/strong>&<\/strong>CR<\/strong><\/p>\n

The SM&CR is structured around three primary elements: the Senior Managers Regime, the Certification Regime, and the Conduct Rules.<\/p>\n

The Senior Managers Regime seeks to establish a precise delineation of roles and responsibilities among each firm’s senior managers. Emphasis is given to key documents, namely the ‘Statements of Responsibilities’ and ‘Responsibilities Maps’, which serve as official records illustrating the assignment of responsibility to individual Senior Managers. These documents are designed to assure regulators that there are no accountability gaps or excessive overlaps. It’s important to remember that Senior Managers are legally obligated to make reasonable efforts to avert regulatory infractions within their respective firm sections.<\/p>\n

The Certification Regime compels firms to verify and confirm that employees engaging in roles tied to the firm’s regulated activities are deemed ‘fit and proper\u2019 and applies to employees whose roles significantly impact the firm or its customers. This judgment relies on their professional qualifications, competency and personal qualities. Upon confirmation, the firm is expected to provide a certificate that must be renewed annually at a minimum.<\/p>\n

Finally, the Conduct Rules consist of a rule set contained in the FCA’s Code of Conduct Handbook (COCON). These rules apply universally to all individuals within the firm, including Senior Managers, Certified Persons and other employees, and are designed to encourage a culture of accountability at all levels. There are two tiers of Conduct Rules, rules for all staff, and specific rules for senior managers. The aim of the rules is to improve both individual accountability and company-wide awareness of conduct issues.<\/p>\n

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First Tier \u2013 Individual Conduct Rules<\/strong><\/em><\/p>\n

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  1. You must act with integrity;<\/li>\n
  2. You must act with due care, skill and diligence;<\/li>\n
  3. You must be open and cooperative with the FCA, the PRA and other regulators;<\/li>\n
  4. You must pay due regard to the interests of customers and treat them fairly;<\/li>\n
  5. You must observe proper standards of market conduct;<\/li>\n<\/ol>\n

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    Second Tier \u2013 Senior Manager Conduct Rules<\/strong><\/em><\/p>\n