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The Senior Managers & Certification Regime (SMCR) will very soon be replacing the Financial Conduct Authority (FCA)’s existing UK Approved Persons Regime (APER), representing a regulatory shift in the UK’s financial services industry. So, what do you need to know about the SMCR?

Following the 2008 financial crisis, parliament sought to replace APER with a system that provided greater emphasis on firms’ senior management and individual responsibility. The result was the creation of a new Senior Managers & Certification Regime.

The SMCR has been in force for banks since March 2016, and for dual-regulated firms since December 2018, and is now set to be implemented for the majority of FCA solo regulated firms from 9th December 2019. The SMCR will replace the APER entirely.

The principal aim of the SMCR is to reduce harm to consumers and to strengthen market integrity. This is achieved by raising the standards of conduct for everyone working in financial services, and by making senior management and their staff more responsible and accountable for their conduct and competence.

How will this affect different firms?

The SMCR aims to encourage senior management and staff of financial services firms; including banks, insurers and brokers, to improve their standards of conduct and take greater personal responsibility and accountability for their actions. The SMCR also seeks to ensure that firms’ management and staff clearly understand and can demonstrate where their responsibilities lie.

The principles and tools in place for relevant persons under APER were adopted to create consistency and were then modified further to reflect the different risks and complexity of the various firms subject to the SMCR.

For Solo-regulated firms, which are currently regulated by the FCA under APER, will be included under the SMCR from 9th December 2019, insurers which are dual-regulated have been regulated under the SMCR since December 2018 while banks, building societies, credit unions, and large investment firms have been regulated under the SMCR since March 2016.

What to do next?

If you’re a firm that is set to be included under the SMCR on 9th December, Richdale Consultants are here to help you navigate the regulatory landscape and meet your various obligations. Our experienced team of consultants will assist you with the structure of your firm, including your contractual obligations as an employer, and will help you ensure that your firm, senior management and staff operate in an SMCR-compliant manner.

For more information about the SMCR or for any other compliance needs, please get in touch with us today.

 

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