The Countdown to the Senior Managers Certification Regime

Do you have the right team and senior engagement in order to understand how SMCR will affect your business?

There are still over 6 months to go before SMCR (Senior Managers and Certification Regime) applies to FCA-regulated firms, but there is plenty to think about before the deadline of 9th December this year.

Preparing the business for SMCR is a project that needs support and input from a broad spectrum of functions, including HR, Compliance and Risk, alongside senior executive ownership.  Equally, it is a project that requires formal set-up, management and governance.

Although the concept of SMCR is relatively clear, the practical implementation may be more complex than expected:

  • Senior Manager Functions (SMFs) are, for Core firms, few in number and conceptually straightforward to identify. However, consider the implications where your CCO (CF10 currently), a designated SMF role, reports to a Chief Risk Officer (not a designated SMF role) at Board level: an unacceptable organisational structure for the regulator. The CF10 would need to be re-assigned or the current owner promoted to the Board.
  • Drawing up a “Responsibility Map” may well feel like overkill, but even for small firms, it will provide clarity on the business and SMF roles to your internal and external stakeholders.
  • Personal accountability is one of the most worrying aspects of SMCR to the SMFs, so how best to ensure that the SMF is adequately supported in the execution of their role? Is there clear line of sight through the chain of command and does current MI give enough visibility to the SMF of problems and challenges?
  • The scope of certification across employees may be broad but it is, mostly, clear.  However, have you considered including HR and IT, given the data they protect on behalf of the firm?  And – if this is the case in your firm – who are the individuals with responsibility for a significant business unit?
  • Documentation changes may be required, and these need to be in place before SMCR comes into force. Have you considered how employment contracts may need to be adjusted, and are all corporate policies appropriately reflecting the SMCR regime?

There is plenty to think about and the detail of implementation may take longer than you envisage.  Do you have the right and team and senior engagement in order to understand how the regulation affects your business, ready for implementation on the 9th December?

Take part in our SMCR Survey as we appraise the state of readiness across the FCA regulated investments industry.  As a participant, we will provide you with a free summary of the results, covering the preparation, challenges and implementation of SMCR.

If you would like to discuss how SMCR will affect your firm, or have questions on your implementation effort, speak to a member of our team.

About the author

Joseph Marti

Principal consultant

My consulting engagements include several target operating model design exercises, specialist software application selection, industry research pieces, regulatory change programmes and outsourcing.