Senior Managers and Certification Regimes: financial services

Updating authors: Michael Sholem, Macfarlanes
Consultant editor: Nick Thorpe

Summary

• The Senior Managers and Certification Regime (SM&CR) have applied to banks since March 2016. The SM&CR was extended to insurers on 10 December 2018, and to all firms authorised by the Financial Conduct Authority (FCA) on 9 December 2019. The SM&CR replaced the Approved Persons Regime. (See Background)
• The SM&CR applies differently depending on the type of firm although there are a number of areas that apply in the same way. (See Application of the Senior Managers and Certification Regimes)
• The SM&CR applies to banks and insurers in broadly the same way. (See Banks and insurers - Senior Managers Regime and Banks and insurers - Certification Regime)
• The FCA made some changes to the Senior Managers Regime (SMR) for solo-regulated firms to reflect the diverse nature of these firms. (See Solo-regulated firms - Senior Managers Regime)
• Under the SMR, senior managers performing senior management functions (SMFs) require pre-approval from the Prudential Regulation Authority and/or the FCA. While some SMFs will be present in all firms, others will exist only in certain firms. (See Senior management functions)
• Under the SMR, there is no territorial limitation for senior managers because the SMR applies to any individual who performs a senior management role, regardless of where their base is. (See UK branches of foreign firms - application of the SMR to banks and insurers and UK branches of foreign firms - application of the SMR to solo-regulated firms)
• The Certification Regime (CR) requires senior managers in relevant firms to assess and certify, at least annually, the fitness and propriety of members of their certification staff. (See Certification Regime)
• The conduct rules reflect the core standards expected of staff. The conduct rules apply to all staff of the firm with the exception of ancillary staff, while the senior manager conduct rules apply solely to senior managers. (See Conduct rules and Territoriality and overseas employees)
• Failure to comply with the conduct rules may result in enforcement action. (See Enforcement)
• Firms are required to take reasonable steps to obtain regulatory references for individuals (including non-executive directors) who are subject to the SMR or the CR. (See References)