The Treasury has announced the Government's intention to extend the implementation of the Senior Managers and Certification regime ("SM&CR") beyond the banking sector to all financial services firms. The SM&CR is due to come into force for banking sector firms in March this year and will replace the current Approved Persons Regime, which has been criticised as being too wide and without sufficient focus on senior managers and their ongoing supervision. The aim is to extend the regime to the financial services sector during 2018.
In its October 2015 statement, the Treasury outlined the key requirements of the new regime, which will focus on continuing assessment to ensure individuals remain "fit and proper" on a regular basis. Under the regime, senior managers will be under a statutory duty to take reasonable steps to prevent regulatory breaches in their areas of responsibility. Firms will also be required to submit robust documentation on the scope of senior managers' responsibilities.
The extension of the SM&CR across the financial services sector, and the proposed introduction of an equivalent regime for insurance firms, places the regulatory spotlight firmly on individual accountability and emphasises the shift towards ongoing supervision and assessment.