ICT Views


Senior Managers Regime

by: (Research & Development Manager) on

Those of you in the banking sector will know about SMR, some will know more than others, particularly if you’re directly affected, and there are some in other areas of financial services who may know very little.  So, here’s a peek into SMR where I’ll look at:

  • What it is and who it affects
  • Prescribed responsibilities
  • The certification regime
  • When it’s happening

What is the SMR and who does it affect?

The SMR will introduce senior management functions (SMF) into banking organisations operating in the UK.  The SMF will effectively replace the current controlled functions (CF) under the Code of Practice for Approved Persons (APER). 

SMR will focus on those people who hold key roles and responsibilities in the relevant firms, and will involve those firms preparing formalised Statements of Responsibilities for each person captured by it.

There are 18 senior management functions (SMFs), split between the PRA and the FCA:

Chief Executive function

SMF1

PRA

Chief Finance function

SMF2

PRA

Executive Director

SMF3

FCA

Chief Risk function

SMF4

PRA

Head of Internal Audit

SMF5

PRA

Head of key business area

SMF6

PRA

Group Entity Senior Manager

SMF7

PRA

Credit union SMF (small credit union only)

SMF8

PRA

Chairman

SMF9

PRA

Chair of the Risk Committee

SMF10

PRA

Chair of the Audit Committee

SMF11

PRA

Chair of Remuneration Committee

SMF12

PRA

Chair of the Nominations Committee

SMF13

FCA

Senior Independent Director

SMF14

PRA

Non-Executive Director

SMF15

FCA

Compliance Oversight

SMF16

FCA

Money Laundering Reporting

SMF17

FCA

Significant Responsibility SMF

SMF18

FCA

 

All individuals who take up a SMF will need regulatory approval from either the PRA or FCA (depending on the function), but there is also a legal requirement for the bank themselves to ensure they have relevant procedures in place to assess the fitness and propriety of these individuals.

Prescribed Responsibilities

There are certain prescribed responsibilities that must be assigned to those holding a senior management function.  There are 30 prescribed responsibilities in total that have been drawn up by both the PRA and the FCA (See here and here for details), some of which apply to all banks regardless of size. 

LondonIndividual Statements of Responsibility should be produced to detail the responsibilities that each senior manager is to perform, showing how these fit into the banks overall governance.  The description of each responsibility can be no more than 300 words, so could prove to be quite a challenge!

Banks must also produce a Responsibilities Map to set out how responsibilities have been allocated each senior manager.  This should reflect a clear organisational structure and show that there are no gaps in accountability.

The Certification Regime

The Certification Regime applies to employees who perform a role relating to a firm’s regulated activity, who are not already captured under the SMR.  For example, those who are in a customer-facing role subject to specific qualification requirements i.e. mortgage advisers (CF30).

The key change here is that the FCA will no longer pre-approve these individuals.  The responsibility for approval will move to the bank themselves, who will have to review fitness and propriety checks for anyone requiring certification.

When is all this happening?

SMR and the Certification Regime come into force on 7th March 2016.  From this date, those individuals captured under these regimes will become subject to the conduct rules, which the FCA have brought in to ensure that individuals at almost all levels of firms can be held accountable for their actions, in line with the different jobs they do.  Wider application of the conduct rules to other staff will commence a year later on 7th March 2017.

There is no doubt that these significant changes have put a huge amount of pressure on banks to ensure they are on top of their regulatory obligations, and this has resulted in a substantial increase in the need for good quality, experienced compliance resource.  You may have already picked up on this heightened interest, and may be keen to take advantage of the opportunities out there.  Don’t forget, an ICA qualification might just be the difference between getting that dream position and coming out second best.

Visit our website here for information on the courses we have available. You can also attend the ICA Open Day on 16 September to find out more about ICA qualifications. 

 

To stay updated on the latest developments in governance,risk and compliance, anti money laundering and financial crime prevention, please follow us on either LinkedInFacebook and Twitter where you are guaranteed to be notified when our next blog post goes live!

Categories :

0 Comments :

Comment

Archive

Tel: +44 (0)121 362 7534

Blogger facebook LinkedIn Twitter youtube google + Trust Pilot

© 2017 – International Compliance Training Ltd, a division of Wilmington plc. International Compliance Training Ltd, is a company registered in England & Wales with company number 4363296 GB. Registered office: Wilmington PLC, 5th Floor, 10 Whitechapel High Street, London. E1 8QS VAT NO.GB 899 3725 51