It seeks to:
Develop a culture of accountability at all levels.
Ensure that firms have the right people in the right roles.
Make it easier for the regulator to work out who is responsible if something goes wrong.
What have been the biggest changes advice firms have seen as a result of the implementation of the Senior Managers & Certification Regime (SM&CR) two years ago?
A requirement of SM&CR is that firms are required to gather evidence to demonstrate on an annual basis that anyone performing a Senior Manager Function (‘SMF’) or a Certification Function is Fit and Proper for their role. We found that firms were generally well placed to meet these requirements as most already had processes in place prior to 9th December 2019 to assess the fitness and propriety, performance and suitability of their staff.
However, there were a number of changes, and new requirements, including that a certificate must be issued to Certified Persons after a full assessment of FIT has been carried out.
The introduction of a standard template regulatory reference that provides a structure to allow firms to share information with each other when employees move from one firm to another was another key change.
From the 9th of December 2019, firms must now request a regulatory reference from past employers, when appointing a new member of staff to perform a Senior Management Function, a Certification Function or a Non-Executive Director. This requirement built on existing obligations placed on firms to provide all information relevant to the fit and proper assessment of a hiring firm. An appropriate reference must be obtained from a candidate’s current employer, and any other previous employers in the past six years.
Obtaining a criminal record check when appointing a new Senior Manager or an existing Senior Manager to a new SMF was a major change. In the previous Approved Persons application process, candidates needed to declare if they had a criminal record, but under SM&CR for Senior Manager applications, it has been bolstered by a rule which requires firms to see sight of a criminal records check as part of each Senior Manager’s application for approval.
The Directory, which is a public register that contains details about specific individuals working in financial services, was another major change. It includes details of individuals; some of whom appeared on a public regulatory register for the first time, for example, mortgage advisers.
Two years on, what are the biggest things firms need to remember?
The SM&CR brought in some new reporting requirements that are summarised below -
- The annual reporting requirement to attest the accuracy of the information of a firm’s Directory persons in the Directory.
- The requirement to update the Directory within seven business days when there are changes to an existing person’s details, a new person joins or an existing Directory person leaves.
- The REP008 Conduct Rules annual reporting requirement where firms need to inform the FCA whether disciplinary action has been taken against individuals who are not Senior Managers for breaches of the Conduct Rules.
Do you think there are any further changes to come from the regulator in this area?
We are not expecting any fundamental changes when it comes to SM&CR, we believe the regulator’s focus will be on checking / ensuring the requirements of SM&CR have been adhered to and embedded into firms.
How we’re helping firms
At SimplyBiz we have provided significant support to our Members to ensure the smooth and all-encompassing transition of our Members firms.
This support, like the Regime itself, is ongoing and we want to share with you some of the unique and personalised support tools we provide to our clients to help them meet the FCA’s ongoing regulatory requirements.
If you need support in this area SimplyBiz can help – we have everything you need to ensure you are up to date and compliant with the SM&CR.