SM&CR: A Step towards Liberation

SM&CR: A Step towards Liberation

Amid the unabated reign of overregulation and tight compliance policies across the global financial sector, the FCA, UK’s financial market watchdog and one of the world’s prestigious regulators, is moving away from the rigid headmaster’s point of view by expanding the Senior Managers & Certification Regime (SM&CR) onto solo-regulated firms.

Replacing the Approved Person Regime (APR) that warrants regulator’s approval of all individuals carrying on non-ancillary activity in a financial service firm, the SM&CR that it comes into force on the 9th of December 2020, introduces two different regimes for firm’s Senior Managers and other employees.

The employees, unlike Senior Managers (who will continue to need FCA approval prior to the commencement of their duties), are subject to yearly assessment and certification by the firm itself.

FCA has relinquished its control to the firms themselves to check and confirm, on an annual basis, employees’ qualification, fitness & propriety and competence by issuing them with certificates. This is a long-awaited and valued recognition, by the regulator, of the fact that the majority of UK financial services firms are managed by responsible and competent individuals capable of acting independently without impairing themselves or the market.

Although this regime has now been rolled out for most firms, no oversight mechanism of this self-certification activity has been provided by the regulator. The market is awaiting further guidance by the FCA to clarify details and prevent possible abuse.  

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