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Here to help with Regulation and Compliance

Compound Growth

Senior Managers Regime (SMR) &

Significant Management Functions (SMFs)

Accountability in Banking: Senior Managers Regime (SMR)

August 2015

The Senior Managers Regime (SMR) will come into force on 7 March 2016 and focuses on individuals that hold key roles and responsibilities within relevant firms. The new regime will affect Banks, Building Societies, Credit Institutions and PRA-designated investment firms that are dual-regulated.

The SMR will ensure that senior managers can be held accountable for any misconduct that falls within their areas of responsibility.The regulators have now clarified the allocation of Prescribed Responsibilities to different categories of Senior Management Function (SMF) holders and issued a single table covering both FCA and PRA Prescribed Responsiblities.

What is a Senior Management Function?

With regards to a firm’s regulated activities a Senior Management Function (SMF) is:

Preparing for the Senior Managers Regime:

Affected firms will now need to prepare for the implementation of the Senior Managers Regime by mapping out and allocating responsibilities. In addition they will need to prepare Statements of Responsibilities for those individuals that carry out Senior Management Functions that adequately outline the scope of responsibilities both fully and accurately.

Firms will also need to ensure that they have the necessary procedures in place to assess the fitness and propriety of staff before requesting approval for a SMF, and to assess this at least annually thereafter.

SMR Transitional Arrangements:

There are transitional arrangements for ‘Grandfathering’ those already approved under the existing Approved Persons Regime to the new Senior Managers Regime.

As such, those already approved for Significant Influence Functions (SIF) under the existing Approved Persons Regime and who will be moving to an equivalent Significant Management Function under the new regime will need to complete a Grandfathering notification form and submit this to the regulator before the deadline of 8th February 2016.  

At the same time, a firm responsibilities map and a Statement of Responsibilities for each grandfathering individual must be submitted.

The Regulators have now provided a Table of Grandfathering Provisions to help with the transition process, as summarised below.

In addition, the Grandfathering Notification forms  (Form K) and the Statement of Responsibilities (SoR) forms are now available to view online in printable hardcopy form and will be available in electronic form for online submission, this Autumn.

SMR Grandfathering Assistance & Support

If you would like support in preparing for the Senior Managers Regime, including mapping out and allocating responsibilities, preparing Statement of Responsibilities and Grandfathering forms, we’d be happy to help, so get in touch.

Combined List of Senior Management Functions (SMFs)

Chief Executive function

SMF 1

PRA

Chief Finance function

SMF 2

PRA

Executive Director

SMF 3

FCA

Chief Risk function

SMF 4

PRA

Head of Internal Audit

SMF 5

PRA

Head of key business area

SMF 6

PRA

Group Entity Senior Manager

SMF 7

PRA

Credit union SMF (small credit union only)

SMF 8

PRA

Chairman

SMF 9

PRA

Chair of the Risk Committee

SMF10

PRA

Chair of the Audit Committee

SMF11

PRA

Chair of Remuneration Committee

SMF12

PRA

Chair of the Nominations Committee

SMF13

FCA

Senior Independent Director

SMF14

PRA

Non-Executive Director

SMF15

FCA

Compliance Oversight

SMF16

FCA

Money Laundering Reporting

SMF17

FCA

Other Overall Responsibility Function

SMF18

FCA

These areas of Prescribed Responsibilities and SMFs are further outlined by application to large or small firms in Consultation Paper 15/22, Annex 4.

SMR Implementation Timetable

Autumn 2015:

Electronic grandfathering forms will become available for submission.

8 February 2016:

Submission deadline for grandfathering notifications.

7 March 2016:

Commencement date of Senior Managers Regime and Certification Regime.

October 2016:

(end of)

First annual submission notifying breaches of the Conduct Rules required for staff included in the Certification Regime.

7 March 2017:

Application of Conduct Rules to staff who are not within the SMR or Certification Regime.

October 2017:

(end of)

First annual submission notifying breaches of the Conduct Rules including other staff who are not within the Senior Managers Regime or Certification Regime.

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Table of Functions for Grandfathering from Approved Persons Regime to Senior Managers Regime

CURRENT CONTROLLED FUNCTION

NEW DESIGNATED SIGNIFICANT MANAGEMENT FUNCTION

All applicable firms (part from credit unions)

The following PRA controlled functions:

Director function (CF1)

Partner function (CF4)

Director of unincorporated association function (CF5)

4

PRA

Chief Finance function (SMF2)

Chief Risk function (SMF4)

Head of Internal Audit (SMF5)

Head of Key Business Area (SMF6)

Group Entity Senior Manager (SMF7)

4

FCA

Executive director function (SMF3)

The PRA's non-executive director controlled function (CF2)

4

PRA

Group Entity Senior Manager (SMF7)

Chairman (SMF9)

Chair of the Risk Committee (SMF10)

Chair of the Audit Committee (SMF11)

Chair of the Remuneration Committee (SMF12)

Senior independent director (SMF14)

4

FCA

Chair of the nominations committee function (SMF13)

The significant management function (CF29)

4

PRA

Head of Key Business Area (SMF6)

Group Entity Senior Manager (SMF7)

4

FCA

Other overall responsibility function (SMF18)

All applicable firms to which the function in the first column applies

Compliance oversight function (CF10)

4

FCA

Compliance oversight function (SMF16)

CASS operational oversight function (CF 10A)

4

FCA

Other overall responsibility function (SMF18)

Money laundering reporting function (CF11)

4

FCA

Money laundering reporting function (SMF17)

Credit unions

The PRA's director controlled function (CF1)

4

PRA

Credit Union Senior Manager (SMF8)

4

FCA

Executive director function (SMF3)

The PRA's non-executive director controlled function (CF2)

4

PRA

Credit Union Senior Manager (SMF8)

4

FCA

Chair of the nominations committee function (SMF13)

Summarised from SUP TP 6.2.7

N.B. This does not apply to those who have been approved for functions under the Appointed Representatives provisions.

Grandfathering Notification (Form K)

Senior Managers Regime:

Statements of Responsibilities (SoR)

N.B. Electronic versions of the above forms will be available from the regulators in the Autumn of 2015.

Remember: Firms have until 8 February 2016 to submit a grandfathering notification form and SoR covering each currently approved person and person whose approval is pending at the date of submission. Any revisions to a Form K notification and SoR must be submitted before 7 March 2016. ​

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Senior Managers Regime:

 Grandfathering Assistance & Support


If you would like support in preparing for the Senior Managers Regime, including mapping out and allocating responsibilities, preparing Statement of Responsibilities and Grandfathering forms, please contact us.