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An Introduction to the Senior Managers and Certification Regime (SM&CR)

The Senior Managers and Certification Regime (SM&CR) is a new UK regulatory framework that was introduced by the Financial Conduct Authority (FCA) in December 2019. It replaces the Approved Persons Regime, which was introduced in the wake of the financial crisis in 2008. SM&CR seeks to create a culture of personal accountability among senior managers within banks and other regulated firms, as well as promote good corporate governance.

The SM&CR establishes three different categories of accountability for senior managers within a given firm: Senior Managers, Certified Persons, and Non-Executive Directors. These roles are designed to ensure that individuals are held personally accountable for their actions or lack thereof. For example, if a financial institution were to suffer from bad decisions made by its senior management team, those individuals could be held responsible for their negligence. This helps to create an environment where personal responsibility is taken seriously and bad decisions are discouraged.

Under this regime, senior managers must take responsibility for setting up appropriate internal controls and systems of risk management within their institutions. They must also have clear lines of communication between them and other employees so that any concerns can be addressed quickly and effectively. In addition, they must have sufficient knowledge of their institution’s activities to make informed decisions on behalf of its customers and shareholders.

Certified Persons are employees who are authorized by the FCA to perform certain activities on behalf of their institutions, such as approving financial promotions or taking investment advice from customers. These individuals must hold certain qualifications before they can be certified by the FCA; this helps ensure that only qualified professionals are making important decisions on behalf of their firms. Finally, Non-Executive Directors are board members who do not have any executive responsibilities but still provide oversight over an institution’s operations from an independent perspective.

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The Senior Managers and Certification Regime (SM&CR) is an important part of UK regulation that seeks to promote greater accountability among senior managers in banks and other regulated firms. It establishes three distinct categories—Senior Managers, Certified Persons, and Non-Executive Directors—all with specific requirements for individuals holding those roles in order to ensure proper oversight over a firm’s operations while promoting ethical behaviour at all times. This helps create an environment where personal responsibility is taken seriously and where bad decisions can be easily identified and rectified quickly if necessary. Understanding the SM&CR framework can help you better understand your own role in a regulated firm, as well as how your business operates according to current regulations set out by the FCA.

Looking to align your model risk with the Senior Managers & Certification regime? Check out Connected Risk’s model risk management module.

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