SMCR Update – What best practice looks like

BCLP comment

This update sets out important (non-handbook) guidance on the FCA’s expectations in relation to SMCR implementation. SMCR implementation is likely to be a key area of supervisory focus for the FCA in the coming years and may result in the FCA visiting firms to assess their level of compliance.

Although the guidance is focussed on FCA solo-regulated firms (who are yet to come fully into scope for the purposes of the regime), in our view the indicators are equally relevant for PRA/FCA dual-regulated firms who may be reviewing their SMCR compliance frameworks. For smaller firms, the FCA accept that they may need to interpret some of the indicators in a proportionate way, but smaller firms should still give thought to the intention behind the indicators.

If firms do not get SMCR implementation right then there is the risk that the FCA may take disciplinary action. Such enforcement action would likely focus on not just the firm, but also on the Senior Managers with the prescribed responsibilities relating to SMCR.

We would suggest that all firms review their processes against these indicators, and make any improvements that may be necessary.

FCA expectations in relation to fitness and propriety

FCA expectations in relation to the Conduct Rules

If you need assistance with SMCR policy reviews, or require Conduct Rules training, then please do get in touch.