Senior Managers and Certification Regime (SM&CR)

What SM&CR is

The Senior Managers and Certification Regime (SM&CR) is the UK's framework for individual accountability in financial services, operated by the FCA and, for dual-regulated firms, the PRA. It replaced the earlier Approved Persons Regime with the aim of making it clearer who within a firm is responsible for what, so that when something goes wrong the relevant individuals can be identified and held to account.

SM&CR applies across the lending sector, from banks and building societies to consumer credit firms and other regulated lenders, with the detail of application scaled to the size and nature of the firm. Its central idea is simple: senior decision-makers should be personally answerable for the areas of the business they run, not able to hide behind collective or diffuse responsibility.

The three components

The regime has three distinct limbs that work together.

• The Senior Managers Regime, under which the most senior individuals hold defined responsibilities, are pre-approved by the regulator, and each have a documented statement of responsibilities
• The Certification Regime, covering staff who are not senior managers but whose roles could cause significant harm, whom the firm must assess as fit and proper at least annually
• The Conduct Rules, a set of basic standards of behaviour that apply to almost all staff in a regulated firm

Statements of responsibility and the duty of responsibility

A defining feature of SM&CR is that each senior manager has a clear, written statement of responsibilities setting out exactly what they are accountable for. Larger firms also maintain a responsibilities map showing how accountabilities fit together across the business, leaving no important area unowned. This clarity is the mechanism by which the regulator can trace a failing back to the individual who was supposed to be in charge of it.

Alongside this sits the duty of responsibility: a senior manager can be held to account if a regulatory breach occurs in their area and they did not take reasonable steps to prevent it. This does not make senior managers automatically liable for every problem, but it does require them to show they exercised proper oversight. For lenders, areas such as financial crime, affordability, conduct and operational resilience each need a clearly accountable owner.

Why it matters for a lender's operations

SM&CR shapes how a lending firm is organised and governed. Decisions about credit policy, affordability models, collections practice and the treatment of customers in difficulty all need an identifiable senior owner, and that owner must be able to evidence that the systems and controls in their area are sound. This connects directly to the FCA Consumer Duty: delivering good customer outcomes is a responsibility that attaches to named individuals, not merely to the firm in the abstract.

In practice, SM&CR reinforces the discipline around documentation, oversight and record-keeping that good lending governance already requires. A firm that can clearly show who owns each decision, what controls are in place and how those controls are monitored is better placed both to run a sound business and to demonstrate compliance. The regime is therefore less a bureaucratic burden than a formalisation of clear, traceable management responsibility.