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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:

• A function that requires the person performing it to be responsible for managing one or more aspects of the firm’s affairs and those aspects involve, or might involve, a risk of serious consequences for the relevant firm, or for business, customers or other interests in the UK.
• ‘Managing’ could include taking or participating in the taking of decisions on how a firm’s affairs should be run.
• Non-executive directors and directors in other group entities, that join in the decision making of a firm, could therefore be specified as SMFs.

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.

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.

Senior Managers Regime (SMR)

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. ​