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Senior Managers and Certification Regime

Volume 644: debated on Tuesday 3 July 2018

The senior managers and certification regime (SM&CR) will come into force for financial services firms regulated by the Financial Conduct Authority only (also known as solo-regulated firms) from 9 December 2019.

The SM&CR is aimed at changing behaviours and culture in the financial services sector. It ensures that senior individuals in firms are approved by the relevant regulator, have a statement of responsibilities outlining what they are accountable for, and can be held personally responsible for misconduct. It also ensures that a code of conduct is set out for all financial services staff, and that employees in roles where they could do significant harm to consumers or to the UK’s financial stability are approved annually by their firm.

The SM&CR was first introduced for banks and building societies through the Financial Services (Banking Reform) Act 2013 and has applied to banks, building societies, credit unions, investment firms and UK branches of foreign banks since March 2016. The Government also legislated in the Bank of England and Financial Services Act 2016 to extend the SM&CR to all financial services firms. The Government recently announced the SM&CR would apply to insurance firms from 10 December 2018. The application to solo-regulated firms is the final stage in the extension of the SM&CR.

HM Treasury will make commencement regulations to bring the regime into force for solo-regulated firms.