On October 15, 2015, HM Treasury announced that certain amendments would be made to the Senior Manager and Certification Regime and that the SM&CR would be extended to all UK authorized firms. Amendments include: (i) removal of the presumption of responsibility for a senior manager when a breach of regulatory provisions occurs in the area in the firm that he is responsible for. The regulator will instead be responsible for proving that a senior manager did not take reasonable steps to prevent a breach from occurring or continuing; (ii) granting the regulators specific powers to take enforcement action against all non-executive directors of firms for their misconduct; and (iii) removing the statutory obligation for firms to notify the regulators when a breach of the Rules of Conduct occurs. Instead, the regulators will be able to make rules providing for when any such notifications would be required. The extension of the SM&CR follows from the recommendations of the Fair and Effective Markets Review in June 2015 that the regime should be extended to wholesale participants in the fixed income, currency and commodity markets. Both the amendments and the extension will be effected through primary legislation in the form of the Bank of England and Financial Services Bill that has been laid before Parliament. However, secondary legislation will also be amended to ensure that the reverse burden of proof and the notification requirements for breach of regulatory rules do not come into effect when the SM&CR comes into effect, which will be on March 7, 2016. It is currently expected that the extension of the SM&CR to all other UK financial institutions will be implemented during 2018.
The announcement is available at: https://www.gov.uk/government/news/chancellor-announces-bank-of-england-and-financial-services-bill.
The policy paper is available at: https://www.gov.uk/government/publications/senior-managers-and-certification-regime-extension-to-all-fsma-authorise d-persons.