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Senior Managers & Certification Regime

The Senior Managers Regime (SMR) came into force in March 2016 and affects all PRA/FCA dual regulated firms. The SMR is intended to close gaps in responsibility, which have previously allowed senior managers to avoid personal responsibility for issues which have occurred under their watch. The SMR holds senior individuals responsible for their conduct and for the conduct of persons and areas which they are responsible. The regime has introduced a criminal offence where a senior manager has made or failed to make decisions, leading to the failure of a financial institution.

The Certification Regime took effect in March 2017. This covers a wider and different population to the SMR. Under FCA rules, persons undertaking a “significant harm function” must be certified by their firm. This includes client facing employees or representatives of the firm. In addition, a wider still group of people need to abide by a Code of Conduct, effectively covering all non-ancillary employees. This includes senior managers, certified staff and any staff in a position to act against the FCA’s/PRA’s principles. Effectively, very few employees (possibly receptionists, premises) are excluded.

From 2018 the combined Senior Managers & Certification Regimes (SMCR) will be rolled out to all FSMA authorised firms. A vast range and type of businesses will be affected, from 1 person IFAs to asset managers with billions under management. The scope and approach to the roll out is currently unclear but “proportionality” is the message being used by the FCA which will consult with stakeholders from mid-2017.

Whilst the FCA has yet to issue detailed guidance on the SMCR, based on our experience of working with clients in the banking and insurance sectors, the extension of the regime will require firms to implement significant changes to their compliance and employment practices. Planning ahead will be essential to successful implementation of the extended regime.

For more information on the extension of the Senior Managers and Certification Regime to all financial services firms, please click here

How can we help?

The Fox Williams SMCR specialist team has a wealth of experience of working closely with ten international banking clients providing either advice on implementing the SMR and the Certification Regime or advice to their senior managers. We can:

  • advise and train boards and senior managers;
  • assist with mapping;
  • revise and assist with the implementation of new contracts;
  • draft new policies and update existing ones to assist with SMCR compliance; and
  • deal with the employee relations issues which inevitably come with a period of change.

As well as helping employers to deal comply with the existing regimes and/or to prepare for the implementation of the SMCR, we can assist Senior Managers and certified staff to understand their own obligations and to deal with challenges which they may face to their status.

Recent experience

  • Project managing the implementation of the SMCR for international banks. This has included assistance with:

    • training and guidance for Boards on the implementation of SMCR on their particular business;
    • identifying which individuals are senior managers;
    • drafting responsibility statements and mapping the organisation;
    • employee relations support for those who want to be senior managers but aren’t, and with those who don’t want to be senior managers but are;
    • changing terms and conditions of employment;
    • updating terms of appointment for affected non-executive directors;
    • drafting new delegation, handover and reference policies;
    • updating existing compliance and whistle blowing policies to comply with SMCR;
  • Advising on the requirements and a suitable process for assessing fitness and propriety annually, drafting guidelines for managers on assessing fitness and propriety and advising on new forms for appraisals and for assessing fitness and propriety;
  • Assisting with the new reference requirements;
  • Providing bespoke training sessions for relevant affected groups (i.e. directors, senior managers and certified staff);
  • Working closely with the Association of Foreign Banks to provide training and support for its members on the implementation on SMCR;
  • Collaborating with HR and Compliance in a number of major high street banks in connection with complex departures for senior managers. This has included procedural and referencing issues and liaison with regulators;
  • Training and updating the wider community about to be affected by SMCR. We will be gathering feedback from clients and contacts with a view to responding to Government consultation.

Recent news, articles and deals:

The extension of the Senior Managers and Certification Regime to all financial services firms – application to UK limited liability partnershipsmore
An introduction to the extension of the Senior Managers and Certification Regime to all financial services firmsmore
Senior managers can mitigate risk by taking concerns to FCA immediately – lawyersmore
Financial services partner Peter Wright comments on Wednesday’s FCA announcementmore


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Peter Wright
Partner
Direct dial: +44 (0)20 7614 2680
pwright@foxwilliams.com

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Chris Finney
Partner
Direct dial: +44 (0)20 7614 2614
cfinney@foxwilliams.com

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Direct dial: +44 (0)20 7614 2623
hfarr@foxwilliams.com

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Joanna Chatterton
Partner
Direct dial: +44 (0)20 7614 2617
jkchatterton@foxwilliams.com

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Aron Pope
Partner
Direct dial: +44 (0)20 7614 2640
apope@foxwilliams.com


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