The Senior Managers and Certification Regime (SMCR) was extended to cover all FCA solo-regulated firms in December 2019. The overarching goal of the regime is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.
This means firms must have identified and nominated individuals to formally perform their Senior Manager Roles. Once Senior Manager Roles have been established, firms must maintain up-to-date records of their responsibilities and performance. These individuals must also undergo an annual assessment to ensure their ‘fitness and propriety’.
Understanding how responsibilities and roles are divided among the Senior Managers of a firm is not just important for the Senior Managers themselves, who have personal liability, but for the firm as a whole.
Recent economic crises have only increased the scrutiny on how Senior Managers can evidence their steps to perform their duty and meet their conduct obligations. This includes understanding who the key workers in their team are, maintaining essential customer services, and ensuring appropriate product governance.
The FCA recently agreed to delay the regulatory deadline to demonstrate compliance with some SMCR requirements for those firms brought into scope by the December 2019 implementation.
Firms now have until March 31, 2021 (instead of December 9, 2020), to have completed their first fitness and propriety assessment and submitted their information about their Senior Managers. However, the FCA has made it clear it still expects firms to satisfy their regulatory responsibilities as soon as possible, stressing the risk in delaying assessments of individuals fitness and propriety.