Essential Guide to SMCR for FCA-Regulated Firms


The Senior Managers Certification Regime, abbreviated to SMCR or SMR, is a regulation implemented by UK regulators in March 2016. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) introduced this legislation to ensure greater regulatory accountability for senior managers within high-profile banks.

In this post, the MyComplianceOffice (MCO) team takes a look at everything that you need-to-know about the SMCR. Read on further to learn more, and if you’d like to obtain professional assistance regarding SMCR, then please do not hesitate to contact us today.

Read about MCO's Software for SMCR and Similar Regulations

 What is SMCR?

 As briefly touched on above, the SMCR is legislation aimed at improving regulatory accountability to senior management in top banks. The objective behind this is to decrease the level of corruption, and enforce a strong culture of compliance within the UK’s financial services market. In essence, the SMCR was created to conceive a framework that fulfils three things.

 First of all, it aimed to concentrate accountability on a smaller number of individuals at the very top of a banking institution. Secondly, it aimed to promote senior individuals to take on greater personal responsibility for all of their actions. Thirdly, it aimed to make it simpler for both banks and regulators to hold individuals accountable for their actions.

Time To Get Serious About SMCR in the Context of Climate Change

 Why Was the SMCR Introduced?

 Essentially, the SMCR was introduced in the UK as a result of the widely perceived lack of individual accountability and governance failings following the financial crisis. The SMCR was put into force for the majority of solo-regulated firms in 2018, and a similar regime has been applied to banks and insurers since 2016.

 What are some Important Lessons to Learn from SMCR?

 Throughout the implementation process, there were a number of important lessons learned by firms. Having spoken to a range of firms, MCO found that there were the following common take-aways. First and foremost, it’s vital to stress the message that this regime is about the tone from the top of the organisation. It’s about communicating and training from the board down, from senior managers and certified persons to other conduct rule staff.

 Likewise, we found that it’s important to frame the regime positively. Employees might be anxious about the regime - particularly the consequences of Conduct Rule breaches and regulatory references. However, firms can focus on the positives and welcome the SMCR. IT’s crucial to highlight that the SMCR is good for business, clients and the wider industry. Finally, it’s necessary to remember that proper training and communication are central to good SMCR.

 Are there Similar Regimes Around the World?

 Following the implementation of the SMCR in the UK, there has been an increased focus on governance, culture and individual accountability within financial services in a whole host of countries across the globe. These include Ireland, Hong Kong, Australia, and Singapore. Many of these regulations are aimed at improving individual accountability, and promoting a healthier culture and more effective governance. For instance, Australian regulators implemented the Banking Executive Accountability Regime (BEAR) and Ireland is introducing a Senior Executive Accountability Regime (SEAR).

Learn how MCO helps firms manage role assurance regimes and regulatory guidelines on individual accountability.

 Have any Questions about SMCR?

 If you are looking for support and assistance with SMCR, then MyComplianceOffice is the place to come. Our experts can help you prepare for SMCR, so that all of your regulatory obligations are fully met. To learn more, request a demo or a consultation. In the meantime, feel free to discover our compliance management software and solutions in more depth today.