The Senior Managers and Certification Regime was introduced in the UK banking sector in 2016 as a direct response to the accountability failures exposed by the financial crisis. A decade on, it has fundamentally changed how regulated firms think about responsibility, governance, and the relationship between individual accountability and institutional culture.

As the regime extends across the broader financial sector — and as regulators in the GCC develop parallel accountability frameworks — firms that have not yet grappled seriously with what SM&CR demands are running out of time.

The Core Principle: Accountability Must Be Traceable

The SM&CR's central insight is deceptively simple: if accountability cannot be traced to a named individual, it effectively does not exist. The pre-crisis model — in which responsibility was diffused across committees, delegated through layers of management, and ultimately owned by no one — produced the conditions for systemic failure.

Under the regime, every material responsibility within a regulated firm must be allocated to a named Senior Manager. Those allocations must be documented in Statements of Responsibilities, reviewed regularly, and updated when roles change. The FCA and PRA can — and do — use these documents as the starting point for enforcement investigations.

For firms that treat their Statements of Responsibilities as a compliance exercise rather than a genuine governance tool, the risk is significant. Regulators have become sophisticated at identifying the gap between documented accountability and actual decision-making authority.

The Extension Beyond Banking

The SM&CR was extended to insurers in 2019 and to all FCA-regulated firms in December 2019. This extension brought asset managers, wealth managers, brokers, financial advisers, and a wide range of other regulated entities within the regime's scope.

The extension has not been uniform in its impact. For smaller firms — particularly those without dedicated compliance functions — the regime has required a fundamental rethink of how governance is structured and documented. For larger, more complex firms, the challenge has been ensuring that accountability maps genuinely reflect how decisions are made, rather than how the organisation chart suggests they should be made.

Several themes have emerged from the FCA's supervisory work since the extension.

Accountability gaps at the boundary of Senior Manager functions. The most common weakness identified in FCA reviews is not a failure to allocate responsibilities — it is a failure to ensure that the allocation is complete. Gaps at the boundary between Senior Manager functions, or responsibilities that fall between two named individuals, are a persistent source of regulatory concern.

Certification regime compliance. The Certification Regime — which requires firms to assess and certify the fitness and propriety of a broader population of staff annually — has proved more demanding in practice than many firms anticipated. The annual certification process requires genuine assessment, not a rubber-stamp exercise, and the FCA expects firms to be able to demonstrate the rigour of their approach.

Conduct Rules training and embedding. All staff within scope of the Conduct Rules must receive training and understand how the rules apply to their role. The FCA has found that many firms have completed the initial training requirement but have not embedded the Conduct Rules into day-to-day management and performance conversations.

The GCC Parallel

Regulators across the GCC are developing accountability frameworks that draw heavily on the SM&CR model. The DFSA in Dubai and the ADGM Financial Services Regulatory Authority in Abu Dhabi have both introduced individual accountability requirements that share the regime's core architecture: named individuals, documented responsibilities, fitness and propriety assessments.

For firms operating across both the UK and GCC, the challenge is building an accountability framework that satisfies both regulatory environments without creating unnecessary duplication. The good news is that the underlying principles are sufficiently aligned that a well-designed group-level framework can address both sets of requirements, with jurisdiction-specific overlays where local rules diverge.

The interaction between UK SM&CR requirements and local GCC governance structures is an area where specialist advice is genuinely valuable. The mapping of UK Senior Manager functions to GCC governance roles is not always straightforward, particularly for firms with matrix management structures or shared service arrangements across jurisdictions.

What Genuine Accountability Looks Like

The SM&CR has prompted a useful question that goes beyond regulatory compliance: what does genuine accountability actually look like in a well-governed firm?

Genuine accountability is not simply a matter of having names on documents. It requires that the individuals named in Statements of Responsibilities have the authority, information, and resources to discharge those responsibilities effectively. It requires that escalation paths are clear and that individuals feel empowered to raise concerns without fear of consequence. And it requires that the board and senior management actively use the accountability framework as a governance tool — not just a regulatory artefact.

Firms that have used the SM&CR as an opportunity to genuinely redesign their governance architecture — rather than simply mapping existing structures onto the regime's requirements — have typically found that the exercise produces real governance improvements, not just regulatory compliance.

Building a Robust Accountability Framework

For firms reviewing their SM&CR compliance or preparing for FCA engagement, several practical priorities stand out.

Review your Statements of Responsibilities for completeness. Map every material responsibility in your firm against your Senior Manager functions. Identify gaps, overlaps, and responsibilities that are allocated in name but not in practice. The test is not whether the document is complete — it is whether a regulator reading it would understand who is actually accountable for what.

Assess your Certification Regime process. Is your annual certification genuinely assessing fitness and propriety, or is it a process that produces the right paperwork? Review the criteria you are applying, the evidence you are gathering, and the governance around certification decisions.

Embed the Conduct Rules. Move beyond initial training to genuine embedding. The Conduct Rules should be referenced in performance conversations, used as a framework for discussing conduct concerns, and reflected in how the firm responds to conduct issues when they arise.

Consider the GCC dimension. If your firm has operations in the GCC, map your UK accountability framework against local requirements. Identify where the frameworks align and where jurisdiction-specific overlays are needed.

Our advisory services include dedicated SM&CR and accountability framework support, and our licensed governance frameworks provide a structured foundation for firms seeking a validated approach to individual accountability.

The accountability dimension of SM&CR connects directly to the broader conduct risk agenda. Our analysis of conduct risk and organisational culture explores how accountability frameworks interact with culture — and why the two must be designed together rather than in parallel. For firms with GCC operations, our piece on corporate governance frameworks in the GCC addresses how local governance requirements align with UK accountability standards.

Conclusion

The SM&CR has been in force for a decade. Firms that are still treating it primarily as a compliance exercise — rather than a genuine governance framework — are missing both the regulatory expectation and the practical opportunity.

Accountability, properly designed and genuinely embedded, is one of the most effective tools available to boards and senior management for managing conduct risk, driving cultural change, and demonstrating regulatory credibility.

To discuss your firm's accountability framework or SM&CR compliance programme, contact us at [email protected].