SM&CR – Are you ready for the 9th of December?

The arrival of the Senior Managers and Certification Regime (SM&CR) for FCA solo-regulated firms is imminent.

By now, firms should be prepared for new regime, which will replace the Approved Persons Regime on the 9th of December.

Here’s what firms should have done before the implementation date:

  • Identified Senior Managers and Certification Staff – SM&CR places emphasis on individual accountability, with the tone set from the top. Firms need to know which individuals fall within which part of the regime.
  • Trained Senior Managers and Certification Staff on the Conduct Rules – Senior Managers and Certification staff will need to have been trained in, and abide by, the Conduct Rules from the start of the new regime. They must be trained on what the rules mean in relation to their individual job role. For staff who do not fall within the Senior Managers and Certification Regime, firms have until December 2020 to put in place processes to comply with the training and reporting requirements and to train staff on the implications of the Conduct Rules.
  • Drafted Statements of Responsibilities (SoRs) for Senior Managers – SoRs should make clear what a senior manager is responsible for. They should be straightforward, self-contained documents. The FCA would not usually expect the description of each responsibility to exceed 300 words. SoRs are not job descriptions; they should not focus on skills and competencies, but on what the senior manager in question is accountable for. If your SoRs are in place, now would be a good time to review them. Are they self-contained documents? Are they factual, concise and without unnecessary detail? Could a third-party, such as the FCA, read the document and understand the Senior Manager’s accountabilities even if they do not know your firm well?
  • Reviewed and updated the necessary documentation and procedures – Ideally, firms will have reviewed their SM&CR-related documentation and procedures ahead of the 9th of December in order to be sufficiently prepared for the new regime. This will include things such as Statements of Responsibilities (explained above), Responsibilities Maps (for Enhanced Firms only), procedures for regulatory referencing requirements, annual fitness and propriety assessments for Senior Managers and Certification staff, Conduct Rules training plans etc. There is a lot to consider.

One of the key aims of SM&CR is improving conduct across financial services by increasing personal accountability throughout the industry. SM&CR therefore represents a cultural change for organisations. Although the focus is now on getting ready for the implementation date, firms should consider how SM&CR will impact them beyond this date.

SM&CR should be viewed, not just as a new set of rules and regulations to abide by, but as an opportunity for firms to review their organisational culture and make positive changes.

If you need any help with SM&CR or feel you’re not prepared for the new regime, please contact helpdesk@rwagroup.co.uk to find out more about our SM&CR Helpline service.

About the author

Ash is Managing Director at RWA. He has over 15 years’ experience in the legal and compliance field and ten years in broker sales and leadership roles in national and global insurance firms.

He is highly skilled in the application of risk-based regulation, working closely with businesses at executive and board level to develop commercially viable, compliant systems and controls. Ash is adept in providing solutions-based interpretations of the FCA’s technical standards and facilitating the transfer of compliance skills and education needed for businesses to self-manage their own compliance and training needs.

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