Senior Managers and Certification Regime Banking Stocktake Report

The FCA has published its review into SM&CR and how it has been implemented by the Banking Sector.

For all solo regulated firms SM&CR kicks in 9 December 2019, however, SM&CR has now been in place for the banking sector for three years as such this is a good opportunity to learn from what went well, what they got wrong and how the FCA will be looking at SM&CR in the future.

Main findings

The main findings were that:

  • Senior Managers understood their responsibilities.
  • Most Banks are still embedding SM&CR.
  • Some banks were unable to demonstrate the effectiveness of certification assessments.
  • Banks are not tailoring conduct rules training to staff job roles.
  • There is no evidence that the bank’s values have been mapped to the conduct requirements.
  • Some banks were unable to explain what a conduct rule breach looks like or what to do when one occurs.
  • Some banks are not relying on regulatory references as part of their initial hiring.

Our thoughts?

Senior Managers

Under SM&CR, senior managers must have a clear understanding of what their role is and what their responsibilities are. To help you do this, we recommend creating a clear statement of responsibilities documents which sets out each senior manager role and what they have responsibility for – Apricity clients have access to a template and guide on this in Knowledge Base.


Certification Regime

The FCA found that banks could not demonstrate the effectiveness of the certification assessments nor was it clear how banks were using the certification regime to evaluate staff as competent.

You need to make sure that all staff are fit and proper to conduct their roles and annually certify them as such. In particular, you need to take into account whether the individual:

  • Has obtained the required qualification (as applicable).
  • Has undergone, or is undergoing, training.
  • Possesses a level of competence.

Regulatory references

The FCA found that some banks were not reviewing or using regulatory references as part of their recruitment processes.

The FCA requires that the regulatory reference is completed in the templated format and must be received within six weeks of you requesting one. The reference covers the previous six years of an individual’s employment and as such, is a useful tool to identify bad apples in your firm, and to warn other firms that they are potentially hiring one!

You complete a building survey before buying a house, you get an MOT before buying a car, why would you not check the previous history of a potential employee?

Conduct Rules

The conduct rules set out 5 rules which every person working in financial services needs to comply with:

  1. You must act with integrity.
  2. You must act with due skill, care and diligence.
  3. You must be open and cooperative with the FCA, the PRA and other regulators.
  4. You must pay due regard to the interests of customers and treat them fairly.
  5. You must observe proper standards of market conduct.

These five rules should be engrained into a firms culture and training must be undertaken to ensure that everyone understands them and how they apply.

A breach of the conduct rules could be where an adviser is failing to deal with a vulnerable customer fairly, or where an adviser is acting contrary to the customers best interests.

Where an individual breaches the conduct rules, you must have processes in place to ensure that this is reported to the FCA, in particular, where any disciplinary action has been taken. For senior managers, this notification must be within 7 business days.

What you should do now

SM&CR goes live 9th December 2019 – by this time you need to make sure that you have SM&CR fully implemented.

In particular, you need to make sure that:

  • All senior managers are trained on new conduct rules.
  • You have completed Criminal Record checks on all senior managers.
  • You have created statements of responsibilities for all senior managers.

The FCA is increasing its focus in this area and we can expect to see renewed focus towards the end of 2020/early 2021 where the FCA will be looking at how solo regulated firms have implemented SM&CR. A further review will likely take place after the 9 December 2020 deadline has passed, to train all staff on conduct rules.

How can Apricity help?

We have launched a dedicated SM&CR resources area, which brings together a number of different initiatives we have created to help firms prepare.

The resources offer a variety of support to advisers, no matter where you are up to in your own preparations for the regulatory changes – ranging from workshops, bespoke implementation days, webinars and handy timeline checklists.


We have hosted several interactive workshops focused on SM&CR as part of our MASTER series – where delegates receive practical training that they can take away with them and implement into their office. Our SM&CR events have received excellent feedback so far, and delegates have left each session with clear tangible action plans to take back to their firms and apply.

SM&CR Implementation Days

In our efforts to make life as easy as possible for those in financial services, we have also launched a brand-new service – SM&CR Implementation Days. This is a bespoke service, aimed at firms who want more hands-on support to actually implement the requirements of SM&CR. This includes a full wrap-around package to help firms prepare, an onsite team training session at their offices, development of new templates and procedures, and expert support in creating their Statements of Responsibility to submit to the FCA. For more information about this service, click here to download our brochure.