On 19 June 2019 we attended the SM&CR Breakfast Briefing hosted at KRM22’s offices.

The Senior Managers & Certification Regime (SM&CR) is part of the UK regulators’ drive to improve culture, governance and accountability across financial services firms. It aims to deter misconduct by improving individual accountability and awareness of conduct issues across the firms.

SM&CR was introduced for banking firms in 2016 and insurers in December 2018. From December 2019, it will apply to solo-regulated firms.

We’ve previously covered the topic of conduct and culture in financial services firms in the series by Patrick Butler, co-founder of the Culture and Conduct Academy at UK Finance. Part 3 in our Conduct and Culture series teed off with a question > How do we measure Culture? 

What’s clear from the implementation of SM&CR is that “as regulators become more expert as to how senior managers can and should drive better conduct, they will become less tolerant of senior managers’ inability, or unwillingness to find ways to measure and manage culture effectively”.

Updated 16 October 2019

Are you Fit and Proper?

What a question! As part of the extension of the SM&CR, the FCA extended the application of the fit and proper guidance in the FIT part of their Handbook to cover Certification staff, as well as Senior Managers and non-approved NEDs (except at Limited Scope firms).

FIT sets out detailed guidance about the types of things firms should consider as part of assessing a person’s fitness and propriety. This includes:

  • honesty, integrity and reputation
  • competence and capability, including whether the person satisfies any relevant FCA training and competence requirements
  • financial soundness

With the spotlight on the first of these point above, being able to evidence honesty, integrity and reputation to the point where the regulators are satisfied, is laced with challenges.

Here at Neotas, we would argue that self-attestation under this point is not fit nor suitable for evidencing compliance under the SM&CR back to the regulators. Our solution provides a piece to complete the regulatory puzzle in evidencing the honesty, integrity and reputation. By utilising what’s publicly available, we can help protect individuals and firms in today’s digital era. We partnered with KRM22 back in June to help firms mitigate risk and evidence SM&CR compliance.