The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) announced changes to the regulatory framework as part of a multi-stage package of reforms from government and regulators.
SM&CR will maintain its core principle of senior leader accountability and the regulators said firms would benefit by having more time to submit senior manager applications when there has been an unexpected or temporary change.
The changes will also help firms streamline annual checks to certify individuals as ‘fit and proper’, while only larger, more complex firms will need to meet enhanced standards.
The updates will help firms better understand the definition of certain senior management roles and give more time to report updates on senior management responsibilities.
The streamlined framework will increase the length of time criminal record checks for senior manager applications are valid for, before an application is submitted, and give firms more time to update the directory, which lists certified staff.
Conversations you need to have with landlords before the Renters’ Rights Act
Sponsored by BM Solutions
The government has published a consultation on SM&CR today, proposing to remove the Certification Regime from legislation. It is also proposing to better enable regulators to reduce the number of functions that require regulatory pre-approval and alleviate the burden of the SM&CR.
The regulators plan to consult on further changes, in line with increased legislative freedom, later this year as part of the Leeds reforms.
Preserving standards while making it easier on firms
Lucy Rigby, Economic Secretary to the Treasury, said: “The UK has some of the highest standards for financial sector governance in the world. They protect consumers, strengthen market integrity and are emulated internationally, helping make our financial services sector one of the great jewels in our economic crown.
“We are committed to preserving those high standards – while making regulation simpler and easier to navigate. By working with regulators to streamline the Senior Managers and Certification Regime, we are cutting unnecessary complexity, halving the administrative burden, and building a simpler, faster and more competitive system.”
Sarah Pritchard, deputy chief executive at the FCA, added: “These joint reforms will keep consumers and markets protected while making the regime more proportionate. We’ve also used our current powers to streamline the regime now, so firms can benefit before future legislation unlocks even more efficiencies”.
David Bailey, executive director for prudential policy at the PRA, said: “The SM&CR plays an important role in ensuring accountability in the provision of financial services, but it is right that we work to ensure it is well-targeted and efficient.
“Today’s reforms are an important first step in allowing firms to focus on what matters most, and we will continue to deliver further improvements to the regime as part of the wider reforms being made by the government.”
