DP 23/3 Review of the Senior Managers and Certification Regime

What has happened?

In December 2022, the Government announced, as part of the Edinburgh Reforms, that the Treasury, the FCA, and the PRA would review the Senior Manager & Certification Regime (SM&CR). In April 2023, the FCA announced that in a joint Discussion Paper (DP) with the PRA, it is seeking input on potential ways to improve the regime, by asking for views on its effectiveness, scope, and proportionality.

The Treasury has, in parallel, launched a Call for Evidence and is also seeking feedback on the SM&CR. This DP, together with the Call for Evidence, is the first full review of the SM&CR, although the FCA had carried out a “stocktake” in 2019 and the PRA carried out an evaluation in 2020.

What are the key points?

Questions have been raised by some stakeholders about aspects of the regime, which are to be revisited as part of the review. These include:

• whether, as intended, the regime makes it easier to hold individuals to account,
• whether the regime has improved conduct within firms,
• whether the regime has a “deterrent effect” in relation to potential Senior Managers,
• whether the scope of the regime is appropriate (the Financial Services and Markets Bill, which is currently before Parliament, includes provisions that would allow the Government to extend the SMCR compliance to credit rating agencies, recognised investment exchanges, Central Counterparties, and Central Securities Depositories),
• whether the regime is applied proportionately to firms and individuals,
• the appropriateness of Statements of Responsibility, Prescribed Responsibilities, and Management Responsibilities Maps,
• the appropriateness of certification functions and the Conduct Rules,
• challenges in completing regulatory references and the criteria for making conduct notifications,
• the growth in new expectations on Senior Managers in respect of new and emerging risks,
• the frequency of submitting SM&CR-related information, and
• delays in SMF approvals and the requirements for criminal record checks.

How can we help you?

Thistle Initiatives has supported firms for over 10 years as a trusted SMCR compliance and regulatory advisor In addition to assisting you as and when required, our team of specialists can provide ongoing guidance on how to meet the myriad of regulations. Our team will not only keep you up to date with new regulations on the horizon but ensure you are fully compliant today.

Are you looking for help with your SM&CR compliance, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to info@thistleinitiatives.co.uk.