The Senior Managers Regime and Certification Regime (SMCR) is a regulatory framework designed to strengthen the accountability of senior individuals working in the banking sector. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have set out detailed rules for SMCR in addition to the application of the Conduct Rules. The objective is to improve standards in the banking sector and make it easier for regulators and firms to see who is responsible for every part of the business.
What is required?
The SMCR regulatory framework comprises of three components:
1. Senior Managers Regime
Applies to all individuals performing a senior management function. Firms must allocate responsibilities to their Senior Managers and apply to the regulators for approval. Each application must be accompanied by a detailed “statement of responsibility” showing the responsibilities of the Senior Manager. A “management responsibilities map”, showing allocated senior management functions and responsibilities of all senior managers must additionally be prepared and filed. This document must be kept up to date and affirmed annually by the firm.
2. Certification Regime
The Certification Regime requires firms to assess the fitness and propriety of all staff who could pose a ‘risk of significant harm’ to either the firm or its customers. This information must be disclosed when the employee joins the firm and thereafter annually. The certification process requires all relevant employees to be presented with a certificate confirming they have been certified as fit and proper to perform those significant harm functions they have been assessed against.
3. Conduct Rules
The Conduct Rules, in many cases, apply to the majority of staff employed by a firm and not simply those persons falling within the Senior Managers Regime or Certification Regime.
How will our SMCR solution help you?
Our solution provides a robust and clear framework to help you manage the first two components of the SMCR regulatory framework – the Senior Managers Regime and the Certification Regime. We would expect firms’ HR systems to manage and maintain the Conduct Rules element.
Relying on manual processes to comply with SMCR regulations would take considerable time with a higher risk of errors and, ultimately, tough penalties including imprisonments. Our solution offers peace of mind so you can be confident in your SMCR requirements:
Senior Managers Regime
Classification of affected legal entities to assist in condensing the lists of Senior Manager Functions (SMFs) and Prescribed, Other and Overall Responsibilities to only the relevant sections.
Responsibility Map components:
- Mapping of SMFs and relevant responsibilities from all categories
- Reporting lines within an entity
- Individual’s Statement of Responsibilities, including their SMFs and associated Responsibilities
Flagging individuals as part of the Certification Regime.
- Fitness and Propriety questionnaire
- Review and sign-off of job description, role/title, and assigned FCA Significant Harm Functions (SHFs)
- Automated workflow for approval/sign-off of self-declaration by the relevant manager(s)
- Full audit trail allows for historical or ‘As Of’ reporting of SMF mappings at any point in time