HMT and Regulators Move Forward with SMCR Review

Following our recent article on the Government’s proposed reforms to the Senior Manager and Certification Regime (“SMCR”) (available here), HM Treasury (the “HMT”) launched a call for evidence (“Call for Evidence”), and the Financial Conduct Authority and the Prudential Regulatory Authority (together, the “Regulators”) jointly published a discussion paper (“DP1/23”).

These reviews aim to determine whether there are opportunities whereby the SMCR’s core objectives can be delivered in a more effective manner, in order to enhance the UK’s attractiveness for financial services business, supporting wider Government aims to drive growth across the economy.

The Call for Evidence and DP1/23 both close on 1 June 2023, and are available here and here.

Call for Evidence

The Call for Evidence groups questions under the following topics:

• whether the regime is delivering against its original aims;
• international competitiveness;
• specific aspects of the SMCR, including compliance requirements around authorisation, breadth of coverage of the Certification Regime and the frequency with which certification must be reviewed; and
• the scope of the regime.

DP1/23

DP1/23 seeks stakeholder feedback in relation to the general effectiveness, scope, and proportionality of the SMCR in order to identify potential policy and process enhancements to SMCR. Responses will inform whether there is a case for the Regulators to propose specific changes to the rules and guidance that implement the SMCR.

Alongside DP1/23, the Regulators stated their intention to undertake further work to reduce delays around senior manager regulatory approvals.

Concluding Remarks

We think that it is quite helpful, and quite telling that the questions posed by these reviews suggest that both HMT and the Regulators are open to revisions to lighten the regime to make the UK financial services sector more competitive in the global market. At this stage, we still expect that these reviews will result in edits more like “fine-tuning” of the SMCR rather than a wholesale change. Arguably, we would say that the current SMCR is working well and, perhaps, it is the enforcement of such regime that requires some tweaks. These reviews will play a crucial part in the shape of the SMCR going forward and therefore all stakeholders should consider responding to the Call for Evidence and DP1/23.