Here you will find a selection of resources and information to support BVRLA members who are subject to the Financial Conduct Authority's Senior Managers and Certification Regime (SM&CR). Complying with the SM&CR is crucial for all regulated firms, and failure to evidence compliance could put the business at risk.
SM&CR replaced the Financial Conduct Authority's Approved Persons Regime on 9 December 2019, changing how those working in financial services are regulated. The scheme applies to regulated firms offering motor finance, and was introduced following succesful application across the banking sector in March 2016.
SM&CR aims to create healthy cultures and effective governance in firms by encouraging greater individual accountability and setting a new standard of personal conduct by:
- encouraging a culture where staff at all levels take personal responsibility for their actions
- making sure firms and staff clearly understand and can demonstrate where responsibility lies
The overall purpose of SM&CR is to reduce harm to consumers and strengthen market integrity.
The BVRLA has been monitoring regulated member firms' compliance with the SM&CR as part of its audit programme, since January 2020.
The BVRLA is an industry leader in facilitating and promoting motor finance best practice via its self-regulatory code, training regime and governance programme. BVRLA members are subject to robust inspection processes as part of membership, positioning them as industry leaders in terms of promoting best practice and raising industry standards.
To implement the senior managers and certification regime in your business will take a few key steps these could include:
- Learning what the SM&CR regime will mean to your firm, by reading the below Factsheet and the other Guidance documents referenced throughout it and attending relevant training, see below for more information on training,
- Determine what SM&CR tier your firm falls into,
- Assess which of your staff members the regime will apply to and be prepared for how you intend to apply it,
- Make sure those affected are adequately trained. See below for more information on the training available
- Create procedures for the annual reviews required to ensure SM&CR staff are fit and proper for their role and the reporting elements required of firms under the regime.
Supporting members’ senior managers implementing the required business structures through our comprehensive 5-step SM&CR Development Programme which provides consultancy, blended learning techniques such as e-learning, webinars and independent work.
Regulated firms are advised to consider the following Top 5 Tips:
- Firms should stay up to date with their FCA Permissions.
Where brokers have the incorrect Financial Conduct Authority (FCA) permissions, they may automatically consider themselves under the incorrect tier for the SM&CR. Where members are unsure on whether their FCA permissions are correct, they should contact the FCA or the BVRLA Compliance team to discuss this. This should be an ongoing exercise and FCA Permissions should be reviewed as part of Compliance Monitoring in case of any changes to business activity.
- Firms should ensure that all required Prescribed Responsibilities for their firm type are allocated amongst Senior Managers.
Further information on the required Prescribed Responsibilities by firm type can be found in the BVRLA’s SM&CR Factsheet.
- Firms should ensure that they have procedures in place to notify the FCA of changes to Statements of Responsibilities.
From the 9 December 2019, any Approved Persons that were registered with the FCA for an SM&CR firm will have been converted to the new regime. This does not mean that there is no need for ongoing monitoring; firms should ensure that the conversions have been correctly implemented and that any additional Senior Managers to be added under the new regime have been submitted to the FCA. Firms should also ensure that procedures are in place for where Statements of Responsibilities for these individuals have any significant change.
- Train Senior Managers and Certification staff on the Conduct Rules and put in place a breach notification procedure.
Members should ensure that any staff that fall into the ‘Senior Managers’ or ‘Certification’ functions of the regime are adequately trained in the conduct rules. Firms will also be required to have in place a breach notification procedure so that any breach of the Conduct Rules can be reported and resolved in a timely manner.
- Prepare for ongoing reviews of Senior Managers and Certification staff.
Procedures should be in place for the annual review of Statements of Responsibility and annual fit and proper reviews of Senior Managers, Non-executive Directors and Certification staff. These reviews should be documented and logged.
- FCA Video: 2-minute film from industry leaders and FCA conduct specialists outlining the effects of SM&CR and its benefits for your firm.
- FCA Podcast: 33-minute interview with Jonathan Davidson and Jayne-Anne Gadhia on Culture and SMCR
- FCA Video: 7-minute film of banking leaders' experiences of adopting the SM&CR
- FCA Guide: 81-page Guide for solo-regulated firms
- FCA Report: Senior Managers and Certification Regime Banking Stocktake Report reviewing lessons learned from implementation in the banking sector.
- FCA Explainer: Conduct rules training
- FCA Statement: SM&CR and coronavirus outlines expectations for solo-regulated firms during the Covid-19 pandemic.