About SMCR
The UK Parliament enacted SMCR legislation in response to the 2008 banking crisis and significant conduct failings such as the manipulation of LIBOR.
The increased regulatory focus on ‘culture’ and individual conduct and personal accountability goes beyond the SMCR legislation and represents a key shift for the UK’s financial services regulators.
About SMCR
The UK Parliament enacted SMCR legislation in response to the 2008 banking crisis and significant conduct failings such as the manipulation of LIBOR.
The increased regulatory focus on ‘culture’ and individual conduct and personal accountability goes beyond the SMCR legislation and represents a key shift for the UK’s financial services regulators.
Viewed through the SMCR lens, this includes:
Encouraging a culture whereby staff at all levels take
personal responsibility for their actions
Ensuring firms and staff clearly understand and can
demonstrate where responsibility and accountability lies
At a high level, firms need to:
Identify employees undertaking Certification Functions, which includes those employees who interact with clients, are material risk takers, are proprietary or algorithmic traders or who perform a significant management or supervisory role
Ensure timely reporting to the regulator(s) for Senior Manager appointments and any conduct rule breaches by employees
Implement a formal fitness and proprietary assessment that requires a number of due diligence checks on an initial and ongoing basis for both Senior Managers and Certified Function holders
Identify Senior Managers who are personally responsible for the areas of business that they manage
Introduce new Conduct Rules, which are similar to the previous FCA Statements of Principle for Approved Persons, that apply directly to most (if not all) employees within a firm
Ensure accurate and timely information is posted on the new FCA Directory
Implement a suite of new written policies and procedures that document a significant number of new requirements that SMCR brings into play
Develop and apply a more formal training programme
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FCA Classification
What you are required to do under the SMCR depends on whether your firm is classified as Limited Scope, Core or Enhanced. If you are unsure what category your firm is please contact us or use our helpful diagram from the FCA below.
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