Senior Managers Regime (Ofer Abarbanel online library)

The Senior Managers Regime (SMR) is a part of UK financial regulation aimed at increasing personal accountability of senior people in the financial services industry.

Background

After the financial crisis of 2008 an array of legislation was introduced to stabilise the financial industry and to rebuild trust. A key area banking regulators looked at was how risk oversight is discharged and what standards of conduct are expected. The SMR’s predecessor, the Approved Persons Regime, had been regarded as no longer suitable and was therefore replaced with this new regime.[2][3]

Features of the Senior Managers Regime

Under SMR, any Bank, Building Society, Credit Union, large investment bank or insurance operating in the UK will have to establish clear accountability of its senior staff.[4] The FCA divided this into three top level areas:

  • Statement of Responsibility, which outlines every senior leader’s area of personal responsibility within the firm
  • Firm Responsibility Mapthat provides clarity how people and responsibilities are aligned to each other
  • Pre-Approval by the regulator of any person holding roles as a senior manager to ensure suitability of that person including evidence of due diligence done[5]

One of the key messages of the SMR is that while a senior leader may delegate his tasks to staff further down the line, he cannot delegate the accountability for oversight and results of actions taken by staff. Therefore, governance will need to be in place to ensure decisions are taken at the right levels and that evidence is in place every step along the way where and when decision are being taken and how decisions align to business strategy.[6]

In its first extension since coming into effect in 2016, as of March 2017 banks and insurances wishing to hire an individual into a critical function are required to obtain references from regulators about that individual.[7]

Context

The Senior Managers Regime is part of an overall package of three regulations:

  • The Senior Managers Regime
  • The Certification Regime, which applies at all ‘material risk-takers’ in a firm
  • Rules of Conduct, applicable to both senior managers and material risk-takers

Extension

While the SMR in its current form only applies to larger firms, the FCA’s timetable outlines the extension to all regulated firms by 2018.[8]

References

  1. ^“Senior Managers Regime | Deloitte UK”. Deloitte United Kingdom. Retrieved 2017-05-04.
  2. ^“Practical Law UK (New Platform) Signon”. uk.practicallaw.thomsonreuters.com. Retrieved 2017-05-04.
  3. ^“Farewell to the Approved Persons Regime | ACA Compliance Group Europe”. www.acacomplianceeurope.com. Retrieved 2017-05-04.
  4. ^“Senior Managers and Certification Regime”. FCA. 2016-04-19. Retrieved 2017-05-04.
  5. ^“Senior Managers Regime – submitting, amending, withdrawing | Bank of England”. www.bankofengland.co.uk. Retrieved 2017-05-04.
  6. ^ “The Senior Managers Regime – What it really takes to sleep soundly at night”. PwC. Retrieved 2017-05-04.
  7. ^“Senior Managers Regime: New rules on references from 7 March”. Personnel Today. 2017-03-01. Retrieved 2017-05-04.
  8. ^“Extension of the Senior Managers Regime: A puzzle for all in 2017”. www.ashurst.com. Retrieved 2017-05-04.

Ofer Abarbanel online library

Ofer Abarbanel online library

Ofer Abarbanel online library