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History

The Senior Managers and Certification Regime (SM&CR) replaces the Approved Persons Regime (APR) which is how the FCA used to regulate people working in financial services.

It was created in response to the financial crisis to develop a new accountability system that was more focused on senior managers and individual responsibility.

The SM&CR aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.

Who does it apply to

All firms regulated by the FCA need to comply with the FCA rules on professionalism, conduct, and governance  The SM&CR applies to all employees who play a role that can affect the firm and its customers in a negative way. The rules under the regime allow the FCA to take direct action against relevant individuals.

As a firm you will need to provide evidence to the FCA that relevant Senior Managers are identified, as well as the individuals who aren’t Senior Managers, but who could have a significant impact on customers or the firm.

Senior Manager

The individual selected will be responsible for:

• ensuring that significant business responsibilities are clearly and appropriately divided among the directors and senior managers of the firm; and
• overseeing the putting in place and maintenance of systems and controls

As a firm, you will need to ensure that:

• The individual is Fit and proper
• You are ready to apply to the FCA for approval
• You can submit a statement of responsibilities

Certification Regime

The Certification Regime applies to Individuals who perform certain roles – these are known as Certification Functions. They are involved in aspects of a firm’s affairs that involve or might involve, a risk of significant harm to the firm or any of its customers.

Examples include:

• People below senior managers responsible for a business unit i.e. significant management function
• Roles needing a qualification
• CASS oversight function - overseeing client money procedures

As a firm you will need to:

• Identify the certified individuals
• Issue a certificate when determining fit and proper to perform the certification function
• Not allow an individual to perform the function if not issued with a certificate

Example below

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Look out for our next article on Fit & Proper Requirements + Conduct Rules.

Key steps you can take towards getting your applications approved by the FCA is to ensure you have conducted a thorough review of your SM&CR requirements. MEMA can help you understand what needs to be included in your application pack and assist y