The Senior Managers and Certification Regime (SM&CR) is made up of three elements: the Senior Managers Regime, the Certification Regime, and the Conduct Rules.
The regime is due to come into force for Financial Conduct Authority (FCA) solo-regulated firms from 9 December 2019, completely replacing the Approved Persons Regime (APR). For more info on the events that led to the regulatory reform, read EnOC’s guide on how the SM&CR came to be.
The Conduct Rules
Under SM&CR, the new Conduct Rules will apply to all firms; Core, Enhanced and Limited Scope, and to all staff (excluding ancillary staff). This is part of a drive to bolster and embed a base level of conduct and behaviour throughout the financial services industry.
What are the Conduct Rules?
There are two tiers of Conduct Rules: the Individual Conduct Rules and the Senior Manager Conduct Rules.
The Individual Conduct Rules apply to almost every staff, except for ancillary staff such as cleaners, receptionists and security guards.
Individual Conduct Rules:
Senior Manager Conduct Rules:
Training of the Conduct Rules should be tailored to individual roles, and how the rules will apply to staff specifically.
Training of the Conduct Rules is a Prescribed Responsibility (b-1) that must be assigned to a Senior Manager, i.e. someone holding a SMF.
The Transitional Arrangements for fit and proper assessments only apply to Certified Staff. All Senior Managers must have completed Conduct Rules training and Fit and Proper Assessments before 9 December 2019. All other staff will have a further 12 months from 9 December 2019 to complete fitness and propriety assessments and to be trained in the Conduct Rules.
Refer to FCA’s “Guide for FCA solo-regulated firms”:
Breaches and the reporting of breaches
Every Senior Manager will have a Duty of Responsibility as a result of FSMA. If a firm commits a breach, the Senior Manager responsible for that area could be held accountable if they did not take reasonable steps to prevent or stop the breach.
Conduct Rules breaches resulting in disciplinary action by Senior Managers must be reported to the FCA within 7 days, and breaches by other staff must be reported annually through the FCA’s GABRIEL system.
Firms are required to make annual Conduct Rules notification to the FCA even if there haven’t been any breaches, to make sure firms correctly monitor and identify Conduct Rule breaches.
EnOC significantly reduces the administration burden, removes complexities, and allows companies to actually focus on the duties of responsibility and accountability.
Check out the platform at www.enoc.pro and find out how EnOC can help speed up your SM&CR journey.