PRIMER: The Senior Managers Certification Regime – International Financial Law Review 15 March 2018

March 16, 2018

Fox Williams employment partner Joanna Chatterton comments 

After the financial crisis, regulators looked to cut off the tentacles of bad actors and ensure the most egregious practices, said to be systemic in the sector, were stopped. The Senior Managers Certification Regime (referred to as SMR) aimed to raise standards of governance, increase individual accountability and help restore confidence in the banking sector. One of the UK Financial Conduct Authority’s (FCA) aims was to restore integrity and trust in the sector – something which had fallen to an all-time-low. The regime has placed a lot of responsibility on individuals themselves to ensure that they can demonstrate that they are taking reasonable steps to act responsibly. But has this led to improved conduct?

What changes did the SMR make?
The new regime replaced the Approved Persons Regime, largely extending it but putting a far greater emphasis on individual accountability. Regulators were unable to get to people at the very top of financial institutions because they were delegating responsibilities elsewhere. 

Commenting on the impact the SMR has had on senior managers in the banking sector, Joanna Chatterton said: "The feedback from financial services firms are that they welcome the opportunity and see it as a good chance to troubleshoot, but they feel uncomfortable about stepping into the shoes of a regulator."

This has led to some senior managers deciding to do other things or even accelerate their retirement plans. "They feel they cannot have oversight over everything on their patch and have decided it is not possible for them," said Chatterton.

If you are a registered International Financial Law Review (IFLR) user, you can access the full article here.


Related pages:

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