The Senior Manager Regime covers the most senior decision-makers in financial services firms. The aim is individual accountability for holding key responsibilities, always subject to regulatory scrutiny. The consultations propose several important changes.
What’s New for SMFs?
- Reducing the number of SMFs needing pre-approval from regulators. The FCA and PRA want to retain pre-approval only for the most critical roles, while many others will move to a simple notification regime. For those, the firm checks fitness/propriety and tells the regulator, who may intervene if needed.
- SMF7 (Group Entity Senior Manager) proposals clarify how firms should assess and identify qualifying group-level senior managers, with planned rule changes to bring controllers (those with significant influence over a firm, such as parent undertakings or majority shareholders) explicitly within the scope of SMF7. Individuals exercising control at the group level will require approval as SMF7s, not just operational managers.
- 12-week rule: More flexibility for firms covering unexpected SMF absences – allowing a longer and clearer temporary cover period.
- Quicker approvals: With backlogs now largely gone, a two-month approval target is planned where pre-approval is still required.
- Statements of Responsibilities (SoRs): Firms will have up to six months to submit a revised SoR following significant responsibility changes, rather than the current requirement for faster updates.
- Clearer guidance: Firms will have additional guidance on SMF definitions, the allocation of Prescribed Responsibilities, and handling foreign appointees.
Summary
Expect to have fewer staff in SMFs requiring pre-approval, and more direct responsibility for determining roles and acting on changes in a timely but proportionate way. Your management team will need robust, documented governance. Leaman Crellin can help ensure your SMF frameworks are futureproofed for these changes.
