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Senior Managers & Certification Regime

The Financial Conduct Authority (FCA) introduced the Senior Managers & Certification Regime (SM&CR) for all FCA regulated firms in December of 2019. The Regime represented a significant change to these firms and requires resources and planning to implement effectively, including for those seeking authorisation or who are already authorised.

Forming part of the FCA’s Culture and Governance priority, SM&CR aims to promote the development of a ‘culture of accountability’ at all levels within FCA regulated firms.

There are three categories of FCA regulated firms i.e., Limited Scope, Core and Enhanced. SM&CR applies each of these categories in varying ways. Firms must, therefore, adhere to the rules that apply to their respective category.

Replacing the FCA’s Approved Persons Regime (which remains in place for Appointed Representatives), FCA authorised firms are no longer able to apply ‘Control Functions’ but must instead appoint Senior Management Functions (SMFs). These functions are typically held by the most senior people within a firm. This forms part of the Senior Managers element of SM&CR. The second element of SM&CR, the Certification Regime (CR), requires that firms determine whether they are required to appoint one or multiple Certification Functions (CFS).

The appointment of SMFs and/or, Non-Executive Directors (NEDs) and CFs may only occur where the appointment satisfies applicable fitness and propriety requirements and in the case of SMFs, where the appointment has been approved by the FCA. CFs and NEDs are approved by firms internally as opposed to the FCA. CFs should therefore be assessed and if found to be fit and proper, they must be issued a certificate that is valid for a maximum of 12 months. The ongoing fitness and propriety of both SMFs, CFs and NEDs must be assessed annually for the continuation of any functions. The assessment must concern the honesty, integrity and reputation, competence and capability, and financial soundness of an SMF, CF and/or NED and will additionally factor in Regulatory References (where applicable) and Standard DBS Checks (where applicable).

SMFs must have Statements of Responsibility. Depending upon a firm’s category e.g., Core and Enhanced firms, Statements of Responsibility will also have mandatory Prescribed Responsibilities (PR) and may also have ‘other responsibilities’. Responsibilities may be split amongst relevant SMFs or held by just one. This enables the FCA to identify who is accountable for a responsibility. PRs do not apply to Limited Scope firms.

For all classifications of SM&CR firms, there are Conduct Rules that must be adhered to. These are a set of minimum standards of individual behaviour and applies to all SMFs, CFs, NEDs and all other individuals i.e., other employees apart from ancillary staff. There are two tiers of conduct rules i.e., Individual Conduct Rules and Senior Manager Conduct Rules. Firms should seek to understand how the Conduct Rules are understood in the context of roles and responsibilities and ensure relevant individuals are appropriately trained.

Authorised firms must notify the FCA whenever they take disciplinary action against an individual for a breach of the Conduct Rules. Notification requirements vary depending on who has breached certain Conduct Rules e.g., SMFs or Individuals other than SMFs. Contact our experts at Scott Robert for support and advice.

How Can Scott Robert Help?

Scott Robert has successfully helped numerous firms navigate and implement the FCA’s Senior Managers & Certification Regime. Our expert advisers will guide you through the process of complying with the regime. This may include:

  • Identifying your firm’s classification i.e., Limited Scope, Core or Enhanced
  • Advising on compliance with the regime (including ongoing requirements)
  • Providing compliance documentation to enable the firm to comply with the regime e.g., Statements of Responsibilities, Assessments and Policies and Procedures
  • Assisting with fitness and propriety assessments (provided as part of compliance documentation) for SMFs, CFs and NEDs.
  • Connecting you to DBS Check organisations
  • Submitting Directory Persons notifications (Directory of Certified and Assessed Persons)
  • Submitting RegData Returns for breaches of Individual Conduct Rules (where applicable)
  • Submitting manual notifications for breaches of the Senior Managers Conduct Rules (where applicable)
  • Establishing if the firm should have Certification Functions and what the firm must do should this be the case
  • Assisting with SM&CR Form-A Requirements

If you would like help or advice on any aspect of the Regime, speak to one of our experts today for confidential advice by calling 0161 413 2796 to find out more.

Why Choose Scott Robert?

Following the introduction of SM&CR in December 2019, Scott Robert has supported hundreds of firms with complying with the Regime.

We employ a team of compliance professionals who are both highly experienced and expertly skilled. We specialise in providing our clients with solutions to often complex regulatory requirements and compliance needs.

Our knowledge of FCA compliance enables our team to support you and your business, provide effective solutions to any problems you face and help you to devise and implement strategies that work for you.

If you would like to know more about complying with SM&CR, speak to one of our experts today for confidential and no-obligation advice by calling 0161 413 2796 to find out more.

You can find out more about Senior Managers & Certification Regime by downloading our free factsheet from the “Access our factsheet” section below.

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Senior Managers and Certification Regime