UK’s Senior Managers and Certification Regime (SMCR)

The UK Financial Conduct Authority recently closed its consultation (CP20/10) to extend the deadline for solo-regulated firms to conduct their first fitness and propriety assessments of certified staff and train all staff on the conduct rules, and updated its webpage with positive and negative indicators firms should consider when conducting the assessments and training. Firms should take action now to prepare for the full implementation of the Senior Managers and Certification Regime.

The UK Financial Conduct Authority and Prudential Regulation Authority have published statements setting out their expectations of dual-regulated and solo-regulated firms on their senior managers and certification regime requirements in the context of the coronavirus (COVID-19). They intend to provide flexibility to firms where they can and have made specific provisions in light of COVID-19.

Following its consultation earlier this year, the UK Financial Conduct Authority has now published a policy statement setting out its final rules for extending the Senior Managers and Certification Regime to solo-regulated firms. All solo-regulated firms will need to prepare to be compliant with the new regime by 9 December 2019.

Morgan Lewis partner Louise Skinner and associate Thomas Twitchett discuss the Financial Conduct Authority’s final guidance setting out its three-tiered approach, along with its expectations for Statements of Responsibilities and Responsibilities Maps, in relation to the extension of the Senior Managers and Certification Regime.

With an eye toward addressing the many complex issues inherent in the preparation and consideration of regulatory references, the UK Banking Standards Board has prepared draft guidance for firms that focuses on three principles: fairness, proportionality, and consistency.

The UK’s Senior Managers and Certification Regime (SMCR) is extended to the insurance and reinsurance sectors as of today, December 10. A package of regulatory rules and standards, SMCR is designed to fundamentally change the culture of firms and improve standards by ensuring that key responsibilities are clearly assigned to individuals, who are personally accountable, and that staff in certain positions are fit and proper to perform their roles and comply with mandatory standards of behaviour. Originally introduced in the UK banking sector in 2016 in an effort to ward off another financial crisis, SMCR is now being rolled out to the insurance and reinsurance sectors, and will be rolled out further to remaining FCA-regulated firms in December 2019.

Morgan Lewis partner Louise Skinner and associate Tom Twitchett have authored an article in IFLR about the extension of the Senior Managers and Certification Regime (SMCR)

The Advisory, Conciliation and Arbitration Service has provided more comprehensive guidance for employers giving employment references in the United Kingdom. Regulated firms are also subject to additional regulatory reference rules.

The Senior Managers and Certification Regime (SMCR), which came into force in March 2016 for UK banks, PRA-designated investment firms, and UK branches of foreign banks, changes the way in which individuals working in financial services are regulated. It was introduced to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.

The Financial Conduct Authority has published a Consultation Paper containing its proposals to expand the Senior Managers and Certification Regime to all FSMA-authorised firms; the window for providing comments to the FCA ends on 3 November 2017.