Primer of the month: how to manage SMR

Author: Olly Jackson | Published: 27 Mar 2018

After the financial crisis, regulators looked to ensure the most egregious practices, said to be systemic in the sector, were stopped. The Senior Managers Certification Regime (SMR) aimed to raise standards of governance, increase individual accountability and help restore confidence in the banking sector. One of the UK Financial Conduct Authority's (FCA) aims was to restore integrity and trust in the sector. The regime has placed responsibility on the individuals themselves to ensure that they can demonstrate they are taking reasonable steps to act responsibly. But has this led to improved conduct?

What changes did SMR make? The new regime replaced the approved persons regime, largely extending it but putting a far greater emphasis on individual accountability. Regulators were unable to get to people at the very top of financial institutions because they were delegating responsibilities elsewhere. The new regime puts a clear onus on senior managers to account for their...