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SM&CR Responsibilities: A Comprehensive View & Holistic Approach

18th March 2019

SM&CR Responsibilities: A Comprehensive View & Holistic Approach

To successfully implement the requirements of the Senior Managers & Certification Regime (SM&CR) you must have an accurate and comprehensive understanding of management responsibilities within your firm.

All responsibilities must be first identified and understood to enable them to be documented, assigned appropriately for agreement with senior managers.

This understanding will then enable the key regulatory items such as the Statements of Responsibilities and Responsibilities Maps, if required, to be completed. The statements set out each senior manager’s roles and responsibilities, whilst the map documents the management and governance arrangements of the business.

For most firms, the easiest way will be to start at the top and work down, categorising people individually under the regime to identify those who will hold senior management functions (SMFs) and those that occupy specified risk-taking positions that require them to be approved as certified persons.

In working your way through the individuals in your firm you will need to consider:

- How each individual seeks assurance for tasks that flow through their areas of responsibility?

- How issues should be escalated? and

- Where an individual’s responsibilities may affect or touch upon another area.

Remember, the delegation of activities in modern businesses is extremely common, particularly in larger firms, and thus there will no doubt be a number of splits and overlaps in responsibilities. However, where a delegation of activity occurs, such as to another senior manager or governance body for example, the delegation of that authority needs to be clearly defined in the Statements of Responsibility.

SM&CR Action Points for Firms:

In undertaking the above, you should ideally create a list identifying each of the following for your Firm:

- Senior Managers Population

- Certification Population; and

- Conduct Populations

By identifying a first draft of each of these populations early on in your SM&CR planning you will then have the information you need to help assess the scale of your required preparations, in addition to gauging the scale of any processes and systems that you will need to implement to support the new regime.

If gathering the population lists for your firm in itself seems daunting, then this is the time to seek additional SM&CR help and resources to ensure your SM&CR planning is not waylaid.

The next step will be to review your existing governance arrangements and documentation. Begin by going through your existing governance arrangements and how they are documented. Remember, under SM&CR the regulator is asking you to confirm your governance arrangements and accept personal responsibility for them and their effectiveness. Changes to your existing arrangements aren’t necessarily required, but now is the time to change them if they are.

Next Steps:

As a starting point for internal dicussions, firms should engage with the Senior Managers within their firms to ensure they are aware of the upcoming changes in regulatory expectation. This will help raise awareness of SM&CR requirements within the firm that will assist in making the latter stages of implementation a success.

SM&CR Support:

Ensuring you have comprehensive and coherent documentation in place is vital to ensure your firm is ready and compliant with SM&CR requirements. If you are preparing for the extension of the SM&CR regime for your firm and need any support or assistance, our experienced consultants would be happy to offer their assistance and practical support. Just drop our friendly team a line.

Related Reading:

• SM&CR for Solo-Regulated Firms: Types of Firm
• Starting SM&CR Preparations: What you need to know
• Finalised Guidance: SM&CR Responsiblities - Statements and Mapping

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