The SM & CR Expansion

Since March last year, the Senior Managers & Certification Regime has had a significant impact on banking in the UK. Replacing the FSA’s Approved Persons Regime (which was heavily criticised following the financial crisis), the new system aimed to enable ongoing supervision of the most important individuals within an organisation, clearly delineate who was responsible for which areas of compliance and make sure that institutions were taking proper responsibility for staff at more junior levels.

So far, the new rules have applied to banks, building societies and credit unions, while the PRA has brought in the Senior Insurance Managers Regime, applying similar guidelines to Insurance Firms. In 2018 though, the SM&CR is set to be extended to cover the wider Financial Services industry, in the hopes of having a rigorous and consistent approach to the full sector. The new extended SM&CR is projected to cover over 500 insurers, over 17000 investment firms and roughly 42000 consumer credit firms, with a total of 66000 certified persons.

The biggest changes those organisations need to be ready for fall into three main areas.

1. First there will be a significant decrease in the number of appointments requiring prior regulatory approval – but the remaining appointments will see a rise in cost per application.

2. Second, many of the currently approved persons sitting below senior management level will become certified persons. Again, there will be costs incurred by the process here but for most large firms they should already have systems in place to monitor and record performance and suitability to produce the required documentation.

3. Finally, these firms will need to implement systems that make sure employees are notified about and trained on the SM&CR Rules of Conduct which will now apply to them.

While those are the most visible changes, the SM&CR rules are extensive and complex, and even though the FCA has not yet set a firm deadline for the expansion, we do know it will be coming at some point in the next year. If you’re concerned about your organisation’s ability to transform the relevant processes and procedures in time, Kind Consultancy can help. We have a pool of skilled interim Compliance professionals who have already helped banks to implement the SM&CR and who will be perfectly positioned to carry out the necessary changes for your organisation. Get in touch on 0121 643 2100 or for a confidential discussion about your SM&CR resource needs.

Lynsey Moore

[Lynsey first posted this blog on LinkedIn]

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