Posted on by Matthew Vincent

The Senior Managers and Certification Regime (SM&CR) may be under review but that doesn’t mean it’s not still in place.

The FCA and PRA recently published a joint discussion paper which asks for feedback on the operational aspects of the SM&CR.  At the same time HM Treasury also published a Call for Evidence seeking views on the legislative aspects of the regime.  This follows the announcement in December 2022 that there would be a review of SM&CR as part of the Edinburgh Reforms.  Responses to the discussion paper are due on 1 June.

This could not come at a more crucial time for the industry with so much regulatory change afoot with expected divergence in MiFID II reporting, EMIR Refit upcoming, as well as various other rewrites concluding.

But in the meantime, we wanted to remind firms of their SM&CR responsibilities. Do firms have a Senior Management Function (SMF) in place for their trade and transaction reporting requirements, accuracy and approvals?  Who is your SMF16?

SM&CR TAKES THREE KEY ELEMENTS:

  • Senior Managers Regime – Understanding and mapping out of the SMF responsibilities and consequences of actions, personal accountability
  • Certification regime – Documenting, demonstrating, and certifying that SMFs are suitable and ‘fit & proper’ for the role, with annual assessments. “Have my SMFs been trained?”
  • Conduct Rules – Governance and documentation, procedures & policies that have been brought into line for SM&CR and controls in place for recording the implementations, steps and the decisions made by your firm to comply with the Conduct Rules across all staff within your organisation.

Kaizen can help firms through the understanding of the accuracy of their regulatory reporting, so SMFs have a valued and independent view of their reporting.  We also provide governance and controls with our structured Control Framework services, designed by former regulators and our industry specialists experts, making sure internal GRC structures and procedures are acceptable.

Only a few months ago, the FCA issued a Dear CEO letter to wholesale brokers reminding them of their regulatory obligations and to take proactive steps towards ensuring compliance, in particular highlighting that individuals in compliance risk personal liability when something goes wrong under the SM&CR.

  • If you’d like some help getting the right controls in place to ensure your firm meets the requirements of the SM&CR from regulatory reporting perspective, please get in touch.