Scope and Proportionality
SMCR is intended to have a proportionate approach and identifies three categories of firms. Some SMCR categorisations are based on permissions or the type of firm and others will be made on the basis of regulatory data submitted via the FCA’s Gabriel/RegData reporting system.
- core (a standard set of requirements will be applicable to the majority of firms)
- enhanced (further senior management functions (SMFs) and prescribed responsibilities similar to the SMCR rules for banks will apply)
- limited scope firms (a reduced set of requirements for smaller firms or those with particular permissions)
The FCA sets out advice for firms, for example:
- There is no territorial limitation to the Senior Managers Regime; it covers a person carrying on the role of Senior Manager whether in the UK or overseas. There are specific rules for branches of overseas firms
- Specific senior management functions (SMFs) are outlined in SUP10C of the FCA Handbook
The SMFs which apply to firms will depend on the firm’s categorisation under SMCR:
(a) only some SMFs will apply to Limited Scope firms (and those that apply will depend on the firm’s activities and permissions)
(b) a core number of SMFs will apply to Core firms
(c) additional SMFs (11 in total) will apply to Enhanced fir.
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SMCR came into force for investment firms on 9th December 2019. SMCR has affected all firms, large and small, and has had an impact in some form on the majority of staff working within investment firms.
PIMFA’s guidance has been drafted following consultation with our two working groups which addressed issues impacting on core and enhanced firms respectively. Most of our firms are core firms. This guide, explains the different types of SMCR firms. We have also had some discussions with smaller banks and consultants to get feedback on the types of issues that arose during the implementation of the SMCR in the banking sector.