The SM&CR is a complex set of rules and regulations, with many specific terms and acronyms that describe and detail how the regime interacts with you and the way you conduct business. Our handy A-Z guide discusses some of the most commonly used terms in the regime, making it easier for you to understand what you need to do to demonstrate compliance. As the regulation evolves, we’ll keep this list up to date, so make sure you bookmark this page!
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A
Employees who are not covered by the Conduct Rules, such as cleaners, receptionists, catering staff and security staff.
A person (which can be either a natural person or a legal person) who has been approved to perform a “controlled function”.
A firm must ensure that there is a clear and appropriate apportionment of significant responsibilities among its directors and senior managers. It must be clear what responsibility which individual has.
This is an employee that carries out ‘certified functions’ who has been confirmed as fit and proper by their firm.
B
Coming soon!
C
A function performed by employees, who could pose a risk of significant harm to the firm or its customers.
The part of the regime that covers Certification Functions.
This is an employee that carries out ‘certified functions’ who has been confirmed as fit and proper by their firm.
In the context of the FCA only, either (a) an FCA-designated senior management function, or (b) an FCA controlled function.
This is the FCA’s Code of Conduct for SMCR firms.
This is the most common type of firm and is defined by exclusion. This is a firm that is not a limited scope firm or an enhanced firm. It is subject to the requirements of the core SM&CR.
A requirement on firms to conduct criminal records checks for Senior Managers and Non-Executive Directors (where a fitness requirement applies) as part of checking that they are fit and proper.
D
Regulated by both the FCA and the PRA.
Every Senior Manager will have a Duty of Responsibility as a result of FSMA. This means that if a firm breaches one of the requirements, the Senior Manager responsible for that area could be held accountable if they did not take reasonable steps to prevent or stop the breach.
E
Personally provides, or is under an obligation personally to provide, services to A (an organisation) under an arrangement made between A and the person providing the services or another person, and is subject to supervision, direction or control by A as to the manner in which those services are provided.
Enhanced firms are larger and have more opportunity to cause harm to their customers. Therefore, they are subject to extra requirements by the SM&CR. More on enhanced firms here.
F
This is the conduct regulator for over 50,000 financial services firms and markets in the UK.
A type of “significant-harm function” specified by the FCA and found at SYSC 27.7.3R and which are listed here.
A controlled function specified in the table found at SUP 10A.4.4R of the FCA Handbook and which are listed here.
A subset of “FCA controlled functions” and means the list of functions specified in the table found at SUP 10C.4.3R of the FCA Handbook and which are listed here.
Firms must make sure all Senior Managers and people performing Certification Functions (ie people under the Certification Regime) are fit and proper to perform their role. This must be done on appointment and at least once a year.
G
Coming soon!
H
A firm must take all reasonable steps to make sure a new Senior Manager has all the information and materials they need to do their job.
I
These are basic standards of behaviour that apply to all individuals performing financial services activities in firms. Firms need to train their staff on the Conduct Rules and how they apply to them. Firms will need to report breaches of Conduct Rules resulting in disciplinary action to us every year, and within 7 days if the person is a Senior Manager.
J
Coming soon!
K
Coming soon!
L
This refers to a small number of firms. These firms are subject to fewer rules than a core firm. A limited scope firm will only carry out a narrow range of activities.
M
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N
Coming soon!
O
An SMF that applies where a senior executive is the most senior person responsible for an area of the firm’s business but they don’t perform any other SMF.
A requirement for every area, activity and management function of the firm to have a Senior Manager with overall responsibility for it.
P
FCA-defined responsibilities that must be allocated to an appropriate Senior Manager.
The Prudential Regulation Authority (PRA) supervises around 1,500 banks, building societies, credit unions, insurers, and major investment firms. It focuses on promoting the “safety and soundness of firms”.
Q
Coming soon!
R
Information that firms need to share with each other when an employee or director moves from one firm to another (for candidates of Senior Managers Functions, Non-Executive Directors and Certification Functions).
A document setting out a firm’s governance and management arrangements, and how responsibilities are allocated to individuals within the firm.
S
The roles where the people doing them need to be approved by the FCA. These are defined in the Handbook.
These are additional Conduct Rules that apply to all Senior Managers. Firms need to train Senior Managers so they understand what the Conduct Rules are and how they apply to them. Firms will need to report breaches of all individual and Senior Manager Conduct Rules by Senior Managers resulting in disciplinary action to us within 7 days.
The people who perform a SMF. These people need FCA approval to do their jobs.
The part of the regime for Senior Managers. This includes SMF, SoRs, Duty of Responsibility, Fit and Proper, PRs, Regulatory References and criminal records checks. For Enhanced Firms, it also includes Responsibilities Maps, Handover Procedures and Overall Responsibility.
A function that (a) requires the person performing it to be involved in one or more aspects of an SMCR firm’s affairs in relation to the performance of a regulated activity; and (b) those aspects involve, or might involve, a risk of significant harm to the SMCR firm or to anyone who is using, or who is or may be contemplating using, any of the services provided by the SMCR firm.
A firm that has been identified as an “SMCR firm” pursuant to the decision tree provided by the FCA in SYSC 23 Annex 1.
These firms are only subject to regulation produced by the FCA, as opposed to dual-regulated firms that are subject to regulation by both the FCA and the PRA.
A document that every Senior Manager needs to have that sets out what they are responsible and accountable for. This needs to be submitted to us when a Senior Manager is being approved and when there is a significant change, and be kept up to date.
This is the acronym for Senior Management Arrangements, Systems and Controls. This is where many of the rules are found.
