Independent Review of Risk Management Framework
Senior ManagersManagers and Certification Regime
The Senior Managers and Certification Regime (SM&CR) is a regulatory framework designed to strengthen the accountability of senior managers in the financial services industry. It is part of the broader Individual Accountability Regime (IAR) introduced by the UK’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
Overview of Topic
The SM&CR is an integral part of the UK’s financial regulatory landscape, developed to enhance the accountability of senior managers in the financial services sector. Introduced by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), the SMR falls under the larger umbrella of the Individual Accountability Regime (IAR). This framework mandates that individuals at senior levels of financial organizations hold clear responsibility for their roles and decisions. It includes requirements for firms to map out the responsibilities of their senior managers and ensure they are fit and proper for their roles. This regime aims to improve standards of conduct at all levels, facilitate effective governance, and reduce harm to consumers and the integrity of the market by holding senior individuals directly accountable for their actions and the culture they foster within their organizations.
Significance in Today's Landscape
The SM&CR came into effect for banks and building societies in March 2016, for dual-registered insurers in December 2018 and for solo-regulated firms in December 2019. Between 2019 and 2020 the number of individuals fined double (latest published data).
WHO DOES IT IMPACT?
The SM&CR applies to all UK banks, building societies, credit unions, and PRA-designated investment firms, including branches of foreign banks operating in the UK
How Can We Help?
Our services include:
1
Application Preparation
Our regulatory advisors work along your legal council to assist in preparing the necessary documentation and information required for the SM&CR application, including Statements of Responsibilities for senior managers, management responsibilities maps, and other relevant documents.
2
Gap Analysis
Our regulatory advisors would conduct a comprehensive review of the company’s current practices and policies to identify gaps in compliance with the SM&CR requirements.
3
Section 166
Section 166 of the Financial Services and Markets Act 2000 (FSMA) in the UK, commonly referred to as a “Skilled Person Review” or “s166 review”, allows the UK’s financial regulators (previously the Financial Services Authority, now the Financial Conduct Authority and the Prudential Regulation Authority) to appoint an independent skilled person (usually a consultancy firm) to review and report on a regulated firm’s activities if there are concerns about those activities. We have a number of experts that have acted as skilled person or that can be approved to that end.
4
Training and Cultural Change and Leadership Development
Our risk and regulatory advisors understand the important of company culture and governance and deliver training programs to ensure that senior managers, certified persons, and other employees understand their responsibilities under the SM&CR.
5
Documentation and Record Keeping
Assist companies in creating and maintaining the necessary documentation, such as Statements of Responsibilities for senior managers and records of certification for certified persons.
6
Policy and Procedure Development
Our risk advisors help companies develop and implement policies and procedures that are compliant with the SM&CR, including fitness and propriety assessments, conduct rule compliance, and reporting requirements.
7
Risk Assessment
Our risk analysts run risk assessments to identify potential areas of non-compliance and recommend mitigating actions.
8
Technology Solutions
We work with a number of technogy partners and therefore can recommend and implement technology solutions that can help companies manage their compliance with the SM&CR, such as certification and record-keeping systems.
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