SM&CR The paper is out and it’s time for action!


After months of speculation and delays, the CP for the extension of  the Senior Managers & Certification Regime (SMCR) has finally been published. The question is, did we get what we were expecting or were there any surprises?

From a Worksmart point of view, it would appear to be  a realistic attempt by our conduct regulator to deliver what it promised all along; that is a “proportionate regime,” but one that is applied across market sectors and participants in a consistent manner. I was confident that this would be the case as it offers some level of consistency with the way it was applied in the banking sector.

It might be useful for me to explain our experience of SMCR and why we think we are “qualified” to comment effectively on this propose regime extension.

Worksmart has worked with UK Banks, Foreign Banks, Credit Unions and Insurers on the banking and insurance regime(s) and we have found that the smaller, less systemically important, firms have indeed been offered a “proportionate” regime.Since the original consultation paper was issued back in 2015, we have worked with affected firms in two primary ways. Firstly to ensure that as a “people centric” solutions provider, we have a robust solution that allows firms to manage all elements of this regime from employee competence and Certification to the component parts of the Senior Managers Regime. Secondly, to provide firms with expert advice on what the regime might mean for them, together with lessons learned along the way (of which I might add there have been many.)

Investing time and effort to bring an often neglected TC regime up to date will pay dividends when a firm needs to use this knowledge, data and evidence to underpin the Certification of individuals

Having read and digested the proposed “proportionate” new regime for the wider market, there are a number of observations that we would make for those yet to start their SMCR journey.

  1. One of the most critical considerations for any firm, regardless of size, is to understand that this regime lives and breathes.” The component parts that make up this regime are allocated to individuals at a very granular level and each time there is a change in role, responsibilities, personnel or regulatory permissions, a firm must be able to not only record , report and track it, but be able to evidence it. Firms would do well to think carefully about how they might do this in the most time and cost efficient manner- underestimate the challenge at your peril!
  2. Consider this: Should the review of my business prior to implementing SMCR be “Top Down” or should it be “Bottom Up?” These are questions we get asked all the time. In the banking sector, driven by the early deadline for implementing the SM element of the new regime, we saw banks pull together separate project teams for the various elements of the regime without necessarily adequately joining the dots. Implementing a Certification Regime for a varied community requires the pulling together of a variety of competence indicators and it’s pleasing to see the wider market acknowledging this and starting to review what competence means to them and how this might be evidenced as part of an annual process.
  3. If you are a “Core Firm” under the new regime, you may think that your requirements are less than the “Enhanced Regime” and therefore believe that much less time will be needed to implement the regime?Don’t be fooled. Due to the people focused nature of the regime, irrespective of your firm’s classification, the regulatory expertise, HR involvement and additional workload to implement and manage the new rules should not be underestimated.  Consider your Project Team, the HR involvement that will be needed across the piece and where you might need to seek external opinion and guidance to fill any gaps. Do your best to ensure that your project team comprises colleagues from Compliance, HR, Operations, Risk and Training. The most successful SMCR implementations we have seen are those that have taken a collaborative approach.
  4. So what can you be doing right now to kick-start the project?  My advice would be to start with a review of your current Training & Competence arrangements. The Certification element of this new regime cannot be undertaken without considering an individual’s T&C status, so that is a great place to start.  Investing time and effort to bring an often neglected TC regime up to date will pay dividends when a firm needs to use this knowledge, data and evidence to underpin the Certification of individuals
  5. Don’t ignore the importance of training!  One of the key changes between this regime and that applied to the banking sector is that the FCA has decided to mandate that firms allocate a Prescribed Responsibility to an individual(s) to ensure that  “Performance by the firm of its obligations in respect of notifications and training of the conduct rules” is owned within this firm.  This is clearly a result of observations in the banking sector that training was the poor relation to other elements of the regime. Whilst lots of time was spent engaging with Senior Management on what the changes meant to them, far less focus was given to the wider communities that were impacted in many organisations.

So, in summary, our key message is “Preparation is the Key to Success” and it’s never too early to start preparing the groundwork for the new regime, regardless of size, shape or firm type


About Author

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Julie Pardy is Worksmart’s Director of Regulation and Market Engagement. Julie is a dynamic, highly engaging, professionally qualified individual who has worked in the field of financial services for the last 25 years and has extensive experience of a wide number of areas such as Regulatory, Governance, Business Quality, Conduct Risk and Behavioural Economics to name just a few. Worksmart has built its reputation by supporting the UK’s leading financial service businesses through the challenges of regulatory compliance. From Training & Competence to Quality Assurance, SM&CR to Complaints Management Worksmart enables smarter business responses. Whether working with an SME or a large corporation, Worksmart’s software solutions create business improvements that also meet the demands of regulatory change. Worksmart software solutions are simple to configure, easy to implement and will help streamline your business processes. With deep experience, comprehensive, award winning product set and wide ranging expertise, Worksmart can be trusted to ensure regulatory change is turned into business advantage.

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