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Treasury and regulators open consultation on SMCR

  • 30/03/2023
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Treasury and regulators open consultation on SMCR
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), along with the Treasury, have launched a consultation into the Senior Managers and Certification Regime (SMCR).

SMCR was introduced in 2016 following the 2008 banking crisis and conduct failings such as LIBOR.

It initially applied to banks, building societies, credit unions and PRA-designated investment firms. Insurers are now included, along with solo-regulated firms barring benchmark administrators.

The regime aims to “promote safety and soundness, reduce harm to consumers and strengthen market functioning by requiring that financial services professionals are individually accountable to their employers and to the regulators”.

The main requirement is to ensure that senior decision-makers are “fit and proper for their roles” and “take reasonable steps” in carrying out their roles. All financial services staff are also required to meet conduct standards.

In December last year, alongside the announcement of his Edinburgh Reforms, Chancellor Jeremy Hunt said that a review into reforming the region would be made in the first quarter of this year.

The FCA and PRA are “reviewing the effectiveness, scope and proportionality of the regulatory regime” and the Treasury has launched a call for evidence to examine the legislative aspect of the regime.

“The reviews aim to understand stakeholders’ views on the functioning of the SMCR and to identify ways to improve the regime to help it work better for firms and regulators, while preserving its underlying aims,” it added.


Concerns and questions raised

The FCA and PRA noted that some stakeholders had raised questions around challenges in completing regulatory references and the criteria for making conduct notifications, the growth in new expectations on senior managers in respect of new and emerging risks and the frequency of submitting SMCR-related information.

The regulators added that some stakeholders had previously raised concerns around delays in obtaining regulatory approval for senior manager improvements. It said that “significant improvements” had been made already with a cut in delays and a fall in open applications and those over three months.

Respondents are asked to respond by completing on online response survey with questions about the scheme.

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