Senior Managers Regime

The Senior Managers Regime is the top tier of the wider Senior Managers and Certification Regime (SM&CR), introduced after the 2008 financial crisis to fix individual accountability at the top of regulated firms. The FCA explains that 'the most senior people in a firm who perform key roles (Senior Management Functions or SMFs) need FCA or PRA approval before starting their roles', meaning they cannot simply be appointed by the firm — the regulator must vet and approve them first.

How the regime bites depends on the size and complexity of the firm: the FCA categorises firms as Core, Enhanced or Limited Scope, and 'a firm's category determines how the Senior Managers Regime applies to it (e.g. which SMFs or prescribed responsibilities apply)', with Enhanced firms — generally larger or higher-impact ones — facing additional requirements to reflect their 'greater size or complexity and potential impact on consumers.' Approved senior managers must also have a 'statement of responsibilities' setting out exactly what they are accountable for, underpinning the regime's central aim of ending the ability of senior individuals to claim ignorance of failings within their remit.