There are seven categories of Limited Scope firm:

-Certain consumer credit firms
-Certain firms whose principal purpose is other than carrying out FCA regulated activities and that are one of the following: oil market participant; service company; energy market participant; wholly owned subsidiary of a local authority or a registered social landlord; or certain firms carrying out insurance distribution activity.
-A sole trader.
-A not-for profit debt advice body.
-An authorised professional firm whose only regulated activities are non-mainstream regulated activities.
-An ‘internally managed alternative investment fund’ that is both a body corporate and not a collective investment scheme.
-Certain claims management firms.

Of these a majority of Limited Scope firms fall into the first category which comprises ‘limited permission’ consumer credit firms. This is broadly defined as a consumer credit firm that performs one or more of the following activities:

-consumer hire (such as tool and car hire)
-credit broking (other than by a domestic premises supplier) where the sale of goods or non-financial services is the main business, and broking is a secondary activity designed to help finance the purchase of those goods or services (e.g. certain motor dealerships and high-street retailers that introduce customers to a finance provider)
- credit broking in relation to consumer hire or hire purchase agreements
- lending where the sale of goods or non-financial services is the main business, and there is no interest or charges and the agreements are not hire-purchase or conditional sale agreements (e.g. certain golf clubs or gyms allowing deferred payment for membership)
- consumer credit lending by local authorities (where lending is within the scope of the Consumer Credit Directive).
- not-for-profit bodies providing debt counselling and/or debt adjusting, including those who also provide credit information services

NB: If a firm carries on lending, secondary broking and/or consumer hire activities under a limited permission, the firm can also apply to carry on limited permission debt counselling, debt adjusting and providing credit information services.

There are a wide variety of firm types that fall into either the Core firm category or the Enhanced firm category. These include (but are not limited to) the following:

- Investment firms, including:
- Asset managers
- Investment advisers (including independent financial advisers and wealth managers)
- Corporate finance advisers
- Brokers/traders
- Market makers
- Mortgage brokers
- Insurance brokers

Certain consumer credit firms that do not fall into the Limited Scope category, including:

- credit broking where introducing customers to lenders or brokers is a main business activity
- credit broking where the sale of goods or services takes place in the customer’s home (such a supplier is known as a ‘domestic premises supplier’)
- debt administration and debt collection
- debt counselling and debt adjusting on a commercial basis
- lending which is not limited permission (such as lending in relation to personal loans, credit cards, overdrafts, pawnbroking, hire-purchase or conditional sale agreements)
- providing credit information services
- providing credit references
- operating an electronic system (peer-to-peer lending)

On account of them having higher perceived conduct risk, Enhanced firms are subject to requirements that are most similar to those for dual-regulated firms.

A firm falls into the Enhanced firm category where it meets one or more of the following six conditions:

Definitional criteria:

1. A firm that is a Significant IFPRU firm (this is the firm’s FCA prudential category, and indicates that the firm is large and/or complex).
2. A firm that is a CASS Large firm (a firm holding client money of over £1 billion or client assets of over £100 billion).

Criteria calculated on a rolling average:

3. Firms with Assets Under Management of £50 billion or more as a 3-year rolling average.
4. Firms with current total intermediary regulated business revenue of £35 million or more per annum calculated as a 3-year rolling average.
5. Firms with annual revenue generated by regulated consumer credit lending of £100m or more calculated as a 3-year rolling average.

Criteria calculated as a point in time

6. Mortgage lenders and administrators (that are not banks) with 10,000 or more regulated mortgages outstanding at the latest reporting date.

For the purposes of SMCR there are four categories of credit institution:

- UK banks, building societies and very large investment firms
- UK credit unions
- UK branch of an EEA bank
- UK branch of a non-EEA bank
- SMCR applies to each category in a different way, therefore we created a bespoke set of courses for each of these..

Under the SMCR, "senior managers" are individuals who perform one of the senior management functions designated by the FCA. Senior Managers are subject to a number of obligations and need to be approved by the UK regulators (the Financial Conduct Authority and/or the Prudential Regulation Authority) to carry out their senior management function(s).

The SMCR's overarching aim is to reduce harm to consumers and to strengthen market integrity. This is achieved by raising the standards of conduct for everyone who works in financial services, and by making senior people in firms more responsible and accountable for their conduct, actions and competence.

The Senior Managers and Certification Regime (SMCR) is a relatively new compliance regulation that is designed to increase the accountability of senior financial services executives for malfeasance. It was put in place largely as a result of the financial crisis of 2008 and certain mishaps including the LIBOR scandal.

SMCR stands for Senior Managers and Certification Regime.

It is designed to increase focus on corporate accountability and raise standards of professional behaviour. It is an integral part of a regulatory initiative to improve culture and conduct at financial institutions, which is perceived by many as the most significant piece of regulation in the industry for a generation.

Prescribed Responsibilities are an element of the Senior Managers Regime which is the part of SMCR that applies to the upper echelons within a financial institution. They are specific responsibilities that a firm must give to a Senior Manager, and are designed to ensure that a senior manager is accountable for certain key conduct and prudential risks at a firm.

SMCR initially came into force in March 2016 for banks, buildings societies and credit unions, in December 2018 for insurers and on 9 December 2019 for a significant majority of other FCA regulated entities, including Enhanced Firms, Core Firms and Limited Scope Firms.

SMCR has come into effect. However for firms that became subject to SMCR in December 2019 (which includes Enhanced Firms, Core Firms and Limited Scope Firms) there are certain requirements that must be met during a 12 month transitional period, including training all staff on the Conduct Rules and issuing a certificate to staff that are subject to the Certification Regime. The deadline for SMCR for fulfilling these requirements is 31 March 2021.

The Senior Managers Regime applies to the most senior individuals within an organisation. These individuals perform Senior Management Functions (SMFs) specified by either the Prudential Regulation Authority or Financial Conduct Authority and are subject to a number of requirements that reflect their level of responsibility and accountability.

Senior Managers will need to be approved by the Prudential Regulation Authority or the Financial Conduct Authority (FCA) to carry out their senior management function. Other staff, including those that previously required FCA approval, are covered by the Certification Regime.

The Financial Conduct Authority (FCA) directory is a new public register that enables consumers, firms and other stakeholders to find information on key individuals working in financial services, including Certification Function holders.

Senior Managers and Certification Regime (SM&CR).

An SMCR firm is a firm that is authorised by either the Prudential Regulation Authority or the Financial Conduct Authority and that is subject to the Senior Managers & Certification Regime.

This includes a wide range of firms – almost 60,000 in total - including banks, investment firms, financial advisers and consumer credit firms.

The Certification Regime applies to individuals whose activities could cause significant harm to their employer or their employer’s customers. It covers employees at UK firms who are based (or spend more than 30 days a year) in the United Kingdom and to overseas employees who are dealing with UK clients. The Certification Regime also applies to individuals who are ‘material risk takers’ wherever they are based.

There are three main elements to the regime:

(1) the senior managers regime;
(2) the certification regime; and
(3) conduct rules that apply directly to a firm's workforce.

There are two tiers of the Conduct Rules.
Broadly speaking, the first tier – consisting of five rules – applies to everyone. The second tier – consisting of four rules – applies only to Senior Managers. Everyone subject to the Conduct Rules must be provided with appropriate training so that they understand how this important ‘code of conduct’ applies to them.