SM&CR The Certification Regime – helping to avoid sleepless nights


Whether you’re already working under the Senior Managers and Certification Regime (SMCR) or are a firm still preparing for your sector’s looming deadline, how are you going to certify people? Richard Whittington, Product Manager at Unicorn Training, looks at what questions you should be asking.

Imagine this. Fast forward two years and you’re a Senior Manager with your firm’s prescribed responsibility for the performance of its obligations under the employee certification regime.

As that Senior Manager you’re personally accountable for ensuring that each year everyone performing a role fulfilling a Certification Function role has been certified, or if they haven’t aren’t performing that certificated role.

This means you need to be able to evidence you took ‘reasonable steps’ to check and confirm each individual was fit and proper to do their job before a certificate was issued should the FCA arrive and start asking questions.

No one is left in any doubt as to the consequences of a Senior Manager being held accountable for failings in their area(s) of prescribed or other responsibility, with managers personally facing fines, suspensions and bans. The financial, reputational and career implications of all this is enough to give you sleepless nights.

Banks, building societies, credit unions and PRA-designated investment firms, to whom the SMCR has applied since March 2016, are now in the ‘business as usual’ stage. Yet many are still struggling with how to certificate people in a way that will satisfy the regulator.

Meanwhile, with SMCR to be rolled out to insurers by 10 December 2018 and all other regulated firms in 2019, these businesses will need to work through how to capture the information they have on their staff, map it to the FCA’s identified Certification Functions and figure out their process for issuing certificates.

Banks, building societies, credit unions and PRA-designated investment firms, to whom the SMCR has applied since March 2016, are now in the ‘business as usual’ stage. Yet many are still struggling with how to certificate people in a way that will satisfy the regulator.

So, to save you those sleepless nights, what questions should you be asking now?

Are your firm’s job descriptions up to date?

Just as the requirement to define and allocate Senior Manager Functions and generate Statements of Responsibilities have made creating clear job descriptions and role profiles a must for SMR, so this applies to Certification Functions as well.

Certification Functions apply to any employee who is isn’t a senior manager, but still holds a position within the firm that could cause significant harm to the business or its customers if that person were to act irresponsibly.

The FCA has identified nine of these significant-harm functions – CASS oversight, benchmark submission and administration, proprietary trader, significant management, functions requiring qualifications, material risk takers, client dealing, algorithmic trading and managers of certification employees. But you may include other such roles too because of the implications to your business and customers.

How can you identify who might need certification under the new regulation if your job descriptions and role profiles don’t make it explicitly clear what responsibilities or risk each position carries? And even if these are up-to-date now, jobs change and evolve so what processes are in place as to how and when they are updated?

You can’t start on the Certification Regime until you have this point of reference.

How do you assess if someone is ‘fit and proper’?

The Senior Manager is responsible for ensuring staff within the Certification Regime are competent and fit and proper to do the role they are employed to do.

This isn’t just about an employee being financially sound and not holding a criminal record – when was their last DBS check, what CPD have they completed, what are their performance review ratings, what about observations and meeting records?

Firms need to consider how best to pull together the full gamut of information on qualifications, mandatory training, competence, CPD, personal characteristics and background checks to create a holistic fit and proper assessment so certificates can be issued annually to those who need them.

This comes down to your T&C system and having the right evidence to support that your employees are doing what they should be. After all, as Philippa Grocott from our partners FSTP told delegates at our latest Client Day in March, “If the regulator can’t see it written down it didn’t happen.”

Will your firm’s current T&C practices help or hinder certification?

Think about your T&C system. Where does all the information you need to create a fit and proper assessment currently sit? Is it offline on paper forms? Is it online but on different systems across HR, compliance and L&D? Is it a mixture of both?

One thing everyone going through SMCR has in common is the need for robust performance management and workflow systems, where recording, file checking and reporting against your T&C scheme is as effective and accessible as possible.

We’ve been building and integrating custom T&C systems and functions for a long time; helping firms bring their policies and procedures online to better manage and report around their T&C schemes. This not only includes access to a range of online or downloadable template forms, for example for role profiles, but integration with CPD schemes and individual activity logs and diagnostics to identify knowledge gaps.

Learning or activities to fill gaps are automatically deployed from a comprehensive Governance, Risk and Compliance (GRC) catalogue of role relevant, bite-size content or a firm’s own in-house eLearning courses, depending on where the gap is.

Having everything in or drawn into one place makes creating and delivering fit and proper assessments much easier.

How are you actually going to issue certificates?

So your job descriptions are up to date, you know what you need to include in a fit and proper assessment, you know where the documents and records are enabling you to evidence someone competence, then what?

Certificates must be issued annually to people who need them. Meanwhile, certified individuals will leave firms with someone new acquiring their responsibilities, or an employee can gain new Certification Functions as their job role evolves. Keeping track of all this on Excel, however small your firm, is an administrative nightmare.

Being able to automatically populate the fit and proper assessment with data pulled in from across your firm, then issuing a certificate and allocating who needs to sign it off before printing and filing it might help? As could an at-a-glance dashboard so supervisors and Senior Managers can see who has and hasn’t got the certificates they need, and the ability to set up registration rules and email reminders.

Our specialist Unicorn LMS SMR tool provides these solutions. And since the first tranche of SMCR regulations came into force, we’ve been working with a number of firms to streamline and automate the process of issuing certificates whenever they are needed from the tool. Automated certification is set to be live this autumn.

When are you going to start looking at your certification processes?

We can answer this one for you….now!

With deadlines for so many other pieces of financial services regulation either just passed or pending in the next 18 months – from MiFID II and PRIIPs to IDD and GDPR plus the ongoing unknowns of Brexit – you could perhaps be forgiven for certification not being at the top of your agenda if your SMCR deadline is later this year or next.

But having seen the steps that need to be put in place before you can even start to think about certification, hopefully it’s clearer why so many firms who have already been through SMCR tell us they wish they started it earlier.

Getting these certification policies, procedures and processes in place, and feeling confident about what the regulator likes to know, and how to get your hands on that information and evidence quickly, will potentially save you many sleepless nights.

*Speak to us about how our Unicorn LMS SMCR tool could support your firm at


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