On 26 July, the Financial Conduct Authority (FCA) extended the Senior Managers Certification Regime (SMCR) to all Financial Service and Markets Authority (FSMA) firms - including insurers, investment firms, insurance and mortgage brokers, asset managers and consumer credit firms.
Around 47,000 additional financial services firms and 200,000 individuals are likely to fall within the scope of SMCR.
The FCA maintains that the principles across all firms should remain consistent, clear, and proportionate, with its overarching aim to reduce harm to consumers across financial services firms. We support this principle, but recognise that the operating models, size, culture and businesses of firms now in scope are diverse.
Organisations will approach the implementation of the rules differently, at different times and pace, and outcomes will vary. However, there is a shared recognition that SMCR is a priority. It is clear that ‘accountability is the new norm’ for all financial services firms.
As many of the changes are likely to have a significant organisational impact it is crucial to approach SMCR in a structured way – maximising early planning, and aiming for consistency and integration.
It is important for firms to engage in the SMCR extension consultation process before 3 November to identify and highlight where proposals will be difficult to implement in practice - but also offer constructive insights and suggestions to the FSMA regulator on implementation.
It will be critical for organisations to build and design the right framework for SMCR; have an appropriate Statement of Responsibilities for senior managers; and create an effective monitoring mechanism to detect any conduct rule breaches - especially where there is a large population of staff
You can find out more on how KPMG can help firms navigate through the incoming complexity of the SMCR extension by downloading our guide from here.
Read Suvro Dutta's comment to the media.
The SMCR, which commenced on 7 March 2016, ushers in a new era of accountability for banking.