Regulatory Alert – Senior Managers and Certification Regime (SMCR) For Asset Managers – Two Months To Go

July 10, 2019

The Senior Managers and Certification Regime (SMCR) has been in operation in financial services over the last number of years and it is about to be extended out to Asset Management organisations. The SMCR will apply to assets managers from 9th December 2019 and asset managers should have their implementation project well on their way by now.  There are three types of categorisations for asset managers under the regime i.e. Limited Scope, Core or Enhanced.

Which Category Applies To You?

The majority of asset management firms will fall under the category of “core firms”. Those of you associated with greater risk (greater than £50 billion assets under management or qualify as CASS large firms) will be in scope for the “enhanced” category and finally “limited scope” firms include those AIF’s which are internally managed.  

What’s The Purpose Of SMCR?

According to the FCA, the goal of SMCR “is to reduce harm to consumers and strengthen market integrity by creating a system that enables firms and regulators to hold individuals to account”. The regime replaces the existing approved persons regime and “the primary purpose of the SMCR is not enforcement but to encourage firms and their staff to take greater responsibility for their actions”

The SMCR Implementation Process

SMCR implementation will involve a lot of thought, training and tweaks for asset managers. Implementation can become complex, especially for those groups that may have headquarters outside of the UK who may need to change some processes to ensure they comply with the rules and avoid a break in the responsibility.

Where To Start?

Asset managers need to look at a number of areas as they strive to comply with the SMCR across the business. Some tasks to consider if you haven’t done so already include:

1. Deciding whether you are subject to core, enhanced or limited scope regime

2. Ensuring that you have senior management and certified persons up to speed with the incoming regulation and getting early buy-in from them

3. Consider drafting up and agreeing on statements of responsibilities for each senior manager

4. Establishing processes to ensure that each senior manager is able to demonstrate that they took ‘reasonable steps’ in discharging their obligations in case they are challenged by the FCA

5. Set up a system that can track senior managers certifying, policies, procedures, and training.

How ViClarity Can Help

ViClarity is helping many asset managers and other financial organisations to track and monitor their SMCR obligations on our Regtech software. The system will ensure that all senior managers are on track in terms of satisfying their obligations and managing governance policies, procedures and arrangements and ensuring they are documented and maintained.


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