Review of the senior managers & certification regime

Abstract

Following the 2022 Edinburgh Reforms, in which the Chancellor of the Exchequer announced a set of reforms designed to drive growth and competitiveness in the financial services sector, both HM Treasury and the Financial Conduct Authority (FCA) with the Prudential Regulation Authority initiated consultations to review the Senior Manager and Certification Regime (SM&CR). The aim of the review was to understand stakeholders’ views on how well the SM&CR is functioning and to identify ways to improve the regime to help it work better for firms and regulators. The SM&CR is seen as an essential tool to strengthen the financial services market by ensuring that financial services professionals are individually accountable to their employers and to the regulators. This article examines how the SM&CR has been operating to date and critically analyses whether it is achieving its original aims. The impact of the SM&CR on the international competitiveness of the UK financial services sector is considered, with comparisons drawn with the United States. Ultimately, this article recommends a greater use by the FCA of its enforcement powers to sanction senior managers, to ensure the international competitiveness of the UK financial services sector and to deter financial crime.