January 16, 2020
Following the 2008 financial crisis and subsequent review of the financial services industry, parliament sought to replace the UK Approved Persons Regime (APER) with a regime that was more focused on firms’ senior managers and individual responsibility. This resulted in the creation of a new Senior Managers and Certification Regime (SMCR).
The SMCR has been in force for banks, building societies, credit unions and PRA-designated investment firms (Relevant Authorised Persons) since March 2016 and has been extended to cover all Financial Conduct Authority (FCA) solo-regulated financial services firms on 9 December 2019. It has replaced the APER entirely.
The SMCR’s overarching aim is to reduce harm to consumers and to strengthen market integrity. This is achieved by raising the standards of conduct for everyone who works in financial services, and by making senior people in firms more responsible and accountable for their conduct, actions and competence. The regime shifts the responsibility of activities within a firm onto senior managers and brings into scope non-executive directors.
How Will the Regime Apply to Different Firms?
For solo-regulated firms, the FCA took a proportionate approach to implementation to reflect the different risks, impact and complexity of firms subject to the extension. Under the FCA’s regime, firms are categorised depending on their size and profile into Core, Enhanced or Limited Scope firms.
Core Regime Firms – This will be the majority of firms, to which the standard set of ‘core requirements’ will apply
Enhanced Regime Firms – These are the largest and most complex firms, to which extra requirements will apply
Limited Regime Firms – These firms will be subject to fewer requirements than Core Regime Firms
The SMCR consists of three key pillars:
Important: There is no territoriality limitation under SMR; Senior Managers performing a role overseas which impacts the strategy of the UK firm would, in certain circumstances, still remain in scope.
The FCA’s new Directory enables consumers, firms and other stakeholders to find information on individuals working in financial services. It will provide access to information available through the Financial Services Register (The FS Register), as well as information about other individuals, including those performing roles no longer made public on The FS Register following the introduction of SMCR.
Banking firms and insurers could start submitting data from September 2019 using the FCA’s Connect system. All other firms could start submitting data from 9 December 2019 with the deadline of 9 December 2020.
Important: The transitional period until 9 December 2020 means that information on some people working in authorised firms, including CF30s, will no longer be up-to-date post-9 December 2019 on the FS Register.
Until this information is available on the new Directory in December 2020, the FCA has suggested firms to check the status of their CF 30 customer functions on the relevant websites of Accredited Bodies. For more information, visit the FCA’s register here.