The Senior Manager and Certification Regime (SM&CR) was introduced in March 2016 by the FCA and extended to solo regulated firms in March 2021. The key aim of the SM&CR is to reduce harm to consumers and to strengthen market integrity by raising standards of conduct for everyone who works in financial services.

There are three main ‘levels’ which determine how intensively the SM&CR will apply to a firm – Limited Scope. Core and Enhanced.

The main elements of each regime are:

• Senior Managers Regime
• Certification Regime
• The Conduct Rules
• Fitness and Propriety

Senior Managers Regime

In all firms Senior Managers will be approved by the FCA and are required to have a ‘statement of responsibilities’ and a ‘duty of responsibility.’ For Core and Enhanced firms, Senior Managers will also have additional prescribed responsibilities.

Certification Regime

This will cover people who are not senior managers, but whose jobs mean they have a significant impact on customers, markets or the firm.

Conduct Rules

The Conduct Rules come into force on 31 March 2021 and will apply to almost all people working in financial services.

Fitness and Propriety

The FCA requires firms to make sure anyone performing a Senior Manager of a Certification Function is fit and proper for their role. Firms must complete checks at least once a year.

What are the Conduct Rules?

There are two different sets of Conduct Rules, ones that apply to ALL staff within a regulated financial services firm and an additional set of conduct rules for Senior Managers.

Rules that apply to ALL staff:

• You must act with integrity
• You must act with due skill, care and diligence
• You must be open and co-operative with the FCA, PRA and other regulators
• You must pay due regards to the interests of customers and treat them fairly
• You must observe proper standards of market conduct

Additional rules that apply to Senior Managers:

• You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively
• You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system
• You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively
• You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice

In addition to these conduct rules, firms are also accountable for notifying the FCA when disciplinary action is taken against an individual for a Conduct Rules breach.

If you’d like to learn more about the Senior Manager and Certification Regime, then signup for our free eLearning course which covers the subject in greater detail. At the end of this 40-minute module you will receive a certificate which can be used prove Continued Professional Development.