The SM&CR – Are You Ready for March 31st?

January 28th – FCA Regulations – deadline for implementing required changes.

March 31st – Senior Managers and Certification Regime (SM&CR) deadline for solo-regulated firms to have undertaken the first assessment of its certified staff’s fitness and propriety.

“While the FCA regulations concerning motor finance and their implementation date has been well publicised, awareness of the SM&CR have been less prominent. All dealers must be ready to meet the SM&CR first assessment requirements by March 31st and it is not a ten-minute fix,” notes CEO Mark Standish from MotoNovo Finance.

Action on both the FCA changes and the SM&CR should be viewed as heavily inter-related. The application of SM&CR, ensures that relevant staff in every dealership are personally accountable for the fair treatment of customers and issues of misconduct.

The SM&CR consists of three parts; the Certification Regime, the Conduct Rules and the Senior Managers Regime, is designed to ensure:

  • Greater personal accountability at all levels
  • Minimum standards of conduct
  • Staff in key jobs are fit and proper to perform their roles

While the final part of SM&CR has been extended to March 31st, it has been in place for a year now. The new FCA regulations concerning motor finance from January 28th and the extended implementation deadline should be viewed as the end of any ‘honeymoon period’. The FCA expects SM&CR to be a catalyst for cultural change and new standards for personal conduct. The events of 2020 and the way in which the FCA has intervened in financial services to support consumers and ensure their fair treatment underlines their commitment to embedding positive change that benefits the consumer.

Everyone promoting/selling F&I products should have already:

  • Completed a Statement of Responsibility (SoR) for each Senior Manager that needs to be updated at least annually, or whenever there are material changes;
  • Maintained a record of their Continuous Professional Development (CPD) of their F&I training;

From a business perspective, the SMCR goes to the heart of Finance and Insurance sales practices and standards. Senior leaders should have been addressing any business practices/operating models that might risk creating poor customer outcomes. It is why, in part, the link to January 28th changes is so important.

Mark Standish closes by noting; “The SM&CR provides business and personal accountability to ensure that businesses place customer needs first. The FCA is very clear; this is not a ‘rubber stamp exercise’. In the context of SM&CR, it’s more important than ever to demonstrate that dealers’ F&I models, culture and operating models post January 28th must be customer-led.”

The Significance of March 31st:

  • Conduct rules come into force, for staff who are not senior managers, certification staff, or board directors;
  • Relevant employees must have received training on the conduct rules and how they apply to their role;
  • It is the deadline for submission of information about directory persons to the Financial Services Register