A new set of rules designed to strengthen individual accountability in the financial services industry comes into force today, affecting employees in around 47,000 firms.
The Senior Managers and Certification Regime (SM&CR) will apply to banks, building societies, asset managers, investment firms, insurers, mortgage providers, consumer credit firms and sole traders.
It aims to place greater individual accountability on the people who work within financial services. At a senior level, executives will face greater individual responsibility. The rules, which are being overseen by the Financial Conduct Authority (FCA), the City watchdog, are part of a series of changes being introduced in a bid to restore confidence in the financial services industry after the 2008 banking crisis.
The SM&CR will apply to every FCA-regulated firm and will apply personal accountability and obligations on those who work in the financial services sector. This includes investment managers, product distributors, insurance brokers and consumer credit providers
The FCA is adding to its existing governance rules as it takes the view that the collective behaviour of individuals creates a firm’s culture. The SM&CR rules are designed to set minimum standards of behaviour.
These changes will affect all firms authorised and regulated by the FCA under the Financial Services and Markets Act (FSMA), as well as European Economic Area (EEA) and third‑country branches.
The SM&CR was introduced for banking firms in 2016 and insurers in December 2018. Financial services firms which were jointly regulated by the FCA and Prudential Regulation Authority (PRA), such as larger banks and insurers, have already been subject to the tougher rules. Today’s changes bring consumer credit and brokers into the fold, meaning that almost all financial services companies will be subject to the FCA regime.
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