FCA proposes extending the SM&CR

In October 2015, HM Treasury announced its intention to extend the regime to replace the Approved Persons Regime.

The aim of the new regime is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.

The FCA proposals for SM&CR include:

• Five conduct rules that will apply to all financial services staff at FCA authorised firms whereby individuals must act with integrity, act with due care, skill and diligence, be open and cooperative with regulators, pay due regard to customer interests and treat them fairly, and observe proper standards of market conduct.
• Senior managers will be approved by the FCA and appear on the FCA Register.
• Employees who are not covered by the Senior Managers Regime, but who significantly impact customers or firms, will be certified for their fitness, skill and propriety at least once a year under the certification regime.

The FCA proposes applying a baseline of specific requirements to all regulated firms, called the “core regime”, and extra requirements for large and complex firms (fewer than 1% of regulated firms) under the “enhanced regime”.

Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA, said: “Culture and governance in financial services and its impact on consumer outcomes is a priority for the FCA.

"The extension of the Senior Managers and Certification Regime is key to driving forward culture change in firms.

“This is about individuals, not just institutions.

“The new conduct rules will ensure that individuals in financial services are held to high standards, and that consumers know what is required of the individuals they deal with.”