Application of the Certified Persons Regime: Evolving best practice and potential pitfalls

Louise Gowland
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Louise Gowland: Head of UK Legal Entity Compliance Oversight, Senior Vice President, Northern Trust, UK

Journal of Financial Compliance, 2023, vol. 6, issue 2, 123-128

Abstract: The primary impetus for the birth of the Senior Managers and Certification Regime (SMCR) was to improve accountability throughout financial services following the 2013 Parliamentary Commission report on Banking Standards report, ‘Changing Banking for Good’. A particular focus of the regime has been to those performing senior manager functions (SMF), which are subject to a statutory ‘duty of responsibility’. Under this statute, SMF role holders can be held personally accountable if it is proved that they did not take ‘reasonable steps' to prevent or stop a breach occurring within their area of responsibility. Throughout the consultation of the regime, the regulators made it clear that firms were not required to necessarily change how they organised themselves, did business or, indeed, hire additional staff as a result; they intended a clarification and reinforcement of governance structures of in-scope firms. Prescribed Responsibility (b) outlined in SYSC 24.2.6(2)R denotes ‘Responsibility for the firm's performance of its obligation under the certification regime’. This prescribed responsibility is demonstrative of the regulator's view of how a firm is structured and organised being the responsibility of a senior manager within the in-scope legal entity. This paper considers the best practice approaches taken to meet the certification requirements of the regime, some of the key challenges and potential pitfalls firms face in this regard and reflects on what could be considered best practice.

Keywords: fitness and propriety; accountability; responsibility; methodology; technology (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2023
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