SM&CR is getting simpler. Allegedly

The Senior Managers and Certification Regime is getting an overhaul. The promised result is lower costs, greater flexibility and simpler compliance for firms.

Lower costs, greater flexibility and simpler compliance: three phrases rarely seen together outside a regulatory press release.

Which sounds lovely. The detail matters rather more.

The Financial Conduct Authority and Prudential Regulation Authority set out the first stage of a multi-part reform package in April. The aim is to reduce unnecessary administration without weakening the principle that senior leaders should remain accountable for what happens on their watch.

The main proposals would:

• Give firms more time to submit senior manager applications following an unexpected or temporary change.
• Remove the need to certify people separately for multiple overlapping functions. The regulators estimate this will reduce the total number of certification roles by around 15 per cent.
• Streamline the annual checks used to confirm that certified individuals remain ‘fit and proper’.
• Raise many of the thresholds for enhanced firms by 30 per cent, so that only larger and more complex businesses must meet the additional requirements.
• Clarify the definitions of certain senior management roles.

The reforms may remove some duplication. They will first require firms to read consultations explaining how the duplication is being removed.

• Allow more time to report changes to senior managers’ responsibilities.
• Extend the period for which criminal record checks remain valid before a senior manager application is submitted.
• Give firms longer to update the directory of certified staff.

These are practical changes rather than a bonfire of regulation. Firms will still need clear responsibilities, proper checks and accurate records, but some of the more repetitive work could be stripped out.

And this is only the first phase.

The government has proposed removing the Certification Regime, which covers less senior roles, from legislation. It also wants to give the regulators greater freedom to reduce the number of senior management functions requiring pre-approval.

The regulators plan to consult later in the year on further changes under the Leeds reforms, which are intended to halve the regulatory burden created by SM&CR.

For advice firms, the sensible response is to follow the detail rather than start rewriting procedures immediately. The final rules and implementation dates will determine when policies, responsibilities maps, annual certification processes and directory-update procedures need to change.

If the reforms work as intended, SM&CR should become less cumbersome without giving senior managers an accountability-shaped escape hatch. That’s a reasonable balance, assuming the final rulebook lives up to the press release.

Regulatory change still creates work before it removes any, of course. If reviewing processes and updating client work starts stretching your team, our paraplanners can provide flexible support without forcing you into another permanent hire.

We’ll leave the regulators to simplify SM&CR. We can at least make the paraplanning part easier.