FIA EPTA response to the FCA and PRA Discussion Paper on the Review of the Senior Managers and Certification Regime (SM&CR) DP1/23

1 June 2023

FIA EPTA members welcome the opportunity to respond to FCA and PRA on the Discussion Paper on the Review of the Senior Managers and Certification Regime (SM&CR) DP1/23.  Generally, FIA EPTA members believe the SM&CR regime is working as intended and has brought renewed focus on individual accountability in financial services. However, in our response, we highlight some of the operational and administrative burdens that SM&CR brings to firms. We believe that the burden can be alleviated without having a material impact on the purpose behind the rules and in a way which supports the Government’s wider competitiveness agenda.

In particular, FIA EPTA members suggest that the FCA should significantly limit the number of Senior Manager Functions that require FCA prior approval. We believe Senior Manager Functions requiring prior approval should be limited to “C-Suite roles” such as  Chief Executive Officer, Executive Directors and Compliance Officer and Money Laundering Reporting Officer roles, as further detailed in Q4 below.

In addition, FIA EPTA members believe the FCA should limit the number of Certification Functions to those roles which pose the most immediate risk to consumers. This would significantly reduce the number of individuals that would be required to be listed on the FCA public directory as in many cases those individuals have no dealings with retail clients or consumers. This is described in more detail in Q9. These steps would reduce some of the administrative burden currently placed on SM&CR firms without losing the regime’s focus on protecting consumers and maintaining market integrity.

We would also highlight the somewhat disproportionate nature of bringing in all Significant SYSC Firms into Enhanced Firm status when, and particularly for FIA EPTA member firms, the consumer and CASS risks are less obvious when compared to the Enhanced SM&CR criteria generally. We elaborate more fully on this point in our response to Q11.


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