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.
Since the introduction of SMCR, similar regulations have been developed in other regulatory jurisdictions.
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.
While most firms have managed the initial implications of SMCR and defined their roles and responsibilities, many are continuing to struggle with implementation of the ongoing monitoring and record keeping aspect, which is key to be able to demonstrate the firm’s compliance with SMCR.