FCA extends law making senior managers responsible for bad behaviour to include 47,000 firms

December 9, 2019

The Senior Managers and Certification Regime (SM&CR) has been extended it to include 47,000 more firms.

The Financial Conduct Authority (FCA), which set up the regulations in 2016 to ensure accountability among financial services, has already applied it to the banking and insurance industries.

Now, it will also apply it to solo-regulated firms in the future.

From December 9 2020, solo-regulated firms must ensure three things.

Firstly, they must ensure that all relevant staff are trained in the conduct rules set out in the SM&CR.

Secondly, they must ensure every employee in certified roles are fit and proper to perform that role.

Thirdly, They must submit data to the FCA about the key people working in financial services.

Jonathan Davidson, executive director of supervision of retail and authorisations, said, “The culture and governance of firms is a priority for us and should be for industry too. We expect firms to embed healthy cultures as this will lead to better outcomes for consumers and markets. It should lead to a healthy and fulfilling environment for employees in which diversity and inclusion is the norm. It should also lead to healthy and sustainable returns for businesses.

“The SM&CR is an important way to ensure that individuals take personal responsibility and it is a catalyst for driving cultural transformation. It is about the principle of stepping up and taking accountability every day from here on, not just about ticking the box on implementation of the regime. So today is just the starting point for what firms need to do to live the spirit of the regime.”

The changes were first flagged in July this year.

This may not be the only extension of the SM&CR that is in the works.

In October, lawmakers in the Treasury Committee announced that they had had enough of services outages to banks and financial services digital platform.

On the back of that, the committee suggested that SM&CR should be extended to include accountability for digital service outages.