The Senior Managers and Certification Regime (SMCR)

The Senior Managers and Certification Regime (SMCR)

The SMCR, which commenced on 7 March 2016, ushers in a new era of accountability for banking.

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The Senior Managers and Certification Regime (SMCR)

The SMCR commenced on the 7 March 2016, ushering in a new
era of accountability for banking.

Following recommendations made in 2013 by the Parliamentary Commission on Banking Standards (PCBS), the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) proposed changes to the way individuals working for relevant firms are supervised and held accountable for the roles they perform. The SMCR commenced on the 7 March 2016, introducing specific responsibilities and conduct rules with the over-riding aim of raising standards in banking and is expected to usher in a new era of responsibility.

Post-implementation considerations

This new regime, which is internationally unique, has been a complex challenge to implement for many banks and will take time to get embedded within organisations. Following commencement attention and focus has now turned to embedding this regime as part of day to day management and governance and adopting effective and suitable ‘reasonable steps’. This will require careful planning, thought and significant effort. The determination of an appropriate certification framework and identification of the right population for certified staff is another key challenge.   

As implementation continues, we expect a fair amount of activity as the regulators analyse and assess the submissions made by the banks. We expect further debate and possibly, some levels of recalibration of the regime based on the industry experience and learnings post implementation. The regime is expected to be extended to wider financial services industry in the next couple of years and thus this regime will continue to be in focus.

Some of the key issues and areas for further debate will likely include:

  • Legal entity versus Matrix structures;
  • Embedding in BAU;
  • Driving and demonstrating the culture agenda;
  • The overseas aspect of the certification regime;
  • Evidencing reasonable steps; and
  • Effective implementation for branches.

 

Context of the Senior Managers and Certification Regime

The aim of SMCR is not to dismantle complex organisations, but to force greater accountability. There are three parts to the new regime.

How KPMG can help

KPMG’s breadth of experience and expertise across all areas impacted by the SMCR and the large number of specific engagements we are running on implementation gives us a real advantage in helping firms with bespoke solutions for the new regime. This will not only help firms to meet the requirements but also to enhance existing governance arrangements.

Contact us to find out how we can help you.

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