Senior Managers & Certification Regime: a Call for Evidence

The HM Treasury has launched a call for evidence on the current functioning of the Senior Managers & Certification Regime (SM&CR). To recall, the regime was launched in 2016 with the aim to improve accountability among senior staff members and among employees that are not senior managers, but may have a significant impact upon a firm’s operation or its customers and to improve the conduct of financial market participants. As such, it requires
– most senior staff performing key roles to be approved by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA);
– firms to annually certify that their non-senior, but important staff meets certain fit and proper requirements; and
– all individuals in the financial sector to act with integrity, skill, care, and diligence.
In this call for evidence now, the HM Treasury primarily seeks feedback on a number of questions which allows the Treasury to evaluate whether or not the regime is functioning as intended and whether or not any adjustments are needed to enhance its effectiveness. It shall be noted at this point that the consultation is high level in nature and does NOT propose any regulatory amendments or specific actions.
In the first part of the document, the HM Treasury outlines the objectives of the regime and summarizes the key requirements under the regime which was implemented by the Financial Services (Banking Reform) Act 2013. Both issues were already briefly described above. In the last section, the HM Treasury states the beformentioned questions which read as follows:
1. Has the SM&CR effectively delivered against its core objectives? For example, making it easier to hold individuals to account; or improving governance, behaviour and culture within firms.
2. Do these core objectives remain the right aims for the UK?
3. Has the regime remained true to its original objectives or has the scope or use of the regime shifted over time?
4. The government would be interested in respondents’ reflections on their experience of the SM&CR, now that it has been in place for some years.
5. What impact does the SM&CR have on the UK’s international competitiveness? Are there options for reform that could improve the UK’s competitiveness?
6. Are there examples of other regimes that the government could learn from?
7. How does the level of detail, sanctions and time devoted to the UK’s SMCR regime compare with that in other significant financial centres?
8. Are there specific areas of the SM&CR that respondents have concerns about or which they believe are perceived as a deterrent to firms or individuals locating in the UK? If so, what potential solutions should be considered to address these? Respondents should provide as much detail as possible to help build the fullest picture of any issues.
9. Is the current scope of the SM&CR correct to achieve the aims of the regime? Are there opportunities to remove certain low risk activities or firms from its scope?
10. Are there “lessons learned” that government should consider as part of any future decisions on potential changes to the scope of the regime to ensure a smooth rollout to firms or parts of the financial services sector?
11. Any other comments the government or regulators would benefit from receiving?
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The call for evidence will be open for public comment until June 1, 2023.