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05 Feb

More than 47,000 firms are now affected by SMCR – How are you preparing?

Since December 2019 the Senior Managers and Certification Regime (SMCR) now affects over 47,000 UK firms governed by the Financial Conduct Authorities. Preparing for SMCR is vital, as it applies to those from very small firms (including sole traders and limited permission consumer credit firms) to some of the largest global firms within the Banking and Financial Services sectors, including all Financial Services and Markets Act authorised firms, as well as branches of non-UK firms with permission to carry out regulated activities in the UK.

The SMCR has applied to the banking sector since March 2016 and to dual-regulated insurers since December 2018. However, it replaced the Approved Persons Regime (APR) for solo-regulated firms from the 9th December 2019. It sets a new standard of personal conduct for everyone working in Financial Services.

What is the Senior Managers and Certification Regime?

The aim of the regime is to “reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence”. 

The two ways it hopes to achieve this are:

  • Encourage a culture of staff at all levels taking personal responsibility for their actions.
  • Make sure firms and staff clearly understand and can demonstrate where responsibility lies.

SMCR requirements depend on the size of the firm. Most firms will be subject to the requirements of the Core regime and smaller firms will fall into the Limited regime, while larger and more complex firms will be subject to additional requirements under the Enhanced regime.

The three SMCR categories:

  • Core: firms in this tier will have to comply with the baseline requirements.
  • Limited: this will apply to firms who already have exemptions under the Approved Persons Regime. These firms will be exempt from some baseline requirements and will typically have fewer senior management functions.
  • Enhanced: this will apply to a small number of firms whose size, complexity and potential impact on consumers or markets warrant more attention. These firms will have extra requirements.

By 9th December 2020 solo-regulated firms will need to ensure:

  • All relevant staff are trained on the Conduct Rules and how they apply to their roles.
  • All staff in certified roles are fit and proper to perform that role and are issued with a certificate.
  • They have submitted data to the FCA for the directory of key people working in financial services.

This implementation will take time and resource. The FCA is advising firms to start preparing for SMCR now, and have published some preparation information and guideless to support.

If you need some extra help to ensure you meet the deadline. Danos Consulting is experienced in implementing and preparing for SMCR and are very well-placed to support you. In particular, we can:

  • Advise on the optimisation of existing governance structures.
  • Review existing policies.
  • Advise on interpreting and applying the new rules and guidance.
  • Provide template documentation.
  • Deliver bespoke training.
  • Assess ongoing compliance needs.

One of the SMCR’s core aims is to encourage firms to embed good governance and make accountability and transparency second nature. Doing this requires instilling a compliant culture throughout your organisation. This can be achieved by ensuring you are hiring the right talent.

As a leading supplier of Compliance and Risk personnel to the Banking and Financial Services industries globally, we are extremely well-placed to find you the best permanent and interim candidates. We use our experience and market knowledge to help you land the best people for your roles. 

If you would like to find out more or would like our support or advice on permanent and interim resource solutions, please do get in touch.

Denis Spearman
Partner, Head of Compliance – Permanent Roles

Tel: +44 (0) 20 7371 8332
Email: dspearman@danosassociates.com

Katherine Lord
Associate Partner, Head of Danos Consulting – Interim Roles

Tel: + 44 (0) 207 010 1153
Email: klord@danosconsulting.com

  • Author

    Denis Spearman

    Partner, Head of Compliance Practice

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