Senior Managers and Certification Regime (SM&CR)

SM&CR requires lenders, motor dealers and brokers to:

  • Encourage a culture for staff of all levels to take responsibility for their actions.
  • Make sure firms and staff clearly understand and can demonstrate where responsibility lies with regards to acting in the interests of customers.

SM&CR categories

Firms may fall under one of three categories under the SM&CR:

Limited scope: this will apply to firms who already have exemptions under the Approved Persons Regime. These firms will be exempt from some baseline requirements and will typically have fewer senior management functions.

Core: firms in this tier will have to comply with the FCA baseline requirements.

Enhanced: this will apply to a small number of firms whose size, complexity and potential impact on consumers or markets warrant more attention. These firms will have extra requirements, for example, lenders and investment firms.

Most motor dealers will fall within Core or Limited Scope, however firms should check this on the FCA website here.

The SM&CR won’t apply to Appointed Representatives. They will continue to be subject to the Approved Persons regime.

The Senior Managers Regime

The FCA has designated a number of Senior Management Functions (SMF) to cover the individuals deemed by the regulator to pose the greatest potential risk to customers or market integrity. SMFs cover a narrower group of people than the current Approved Person Regime. Firms are required to undertake the following activities:

  • Pre-approval: Those individuals who hold an SMF position must be approved by the FCA before they are appointed to their new role. This is currently applicable under Approved Person Regime;
  •  Regular Assessment of Fitness and Propriety: Firms need to take responsibility for their staff being fit and proper to perform their role. Assessments must be conducted on an ongoing basis, and at least once a year;
  • Statements of Responsibility: Every Senior Manager will require a document that states what they are responsible and accountable for;
  •  Prescribed Responsibilities: In addition to the inherent responsibilities of a Senior Manager that relate to their SMF function, the FCA proposes that firms must allocate ‘prescribed responsibilities’ to their Senior Managers. These will vary depending on the size and complexity of the firm.