The SMCR Regime Review (CP25/21) – Why Senior Manager Accountability Remains Key
The current review of the SMCR has generated discussion across financial services. From proposed refinements to potential streamlining, firms are understandably eager to know what’s changing and how it might affect them.
However, one thing is clear. Nowhere in CP25/21 will you find a line suggesting that those who continue to hold Senior Management Functions will be expected to do less, or to undertake their responsibilities with less rigour.
In fact, the opposite is true.
The heart of SMCR has always been about personal accountability. Senior managers are tasked not only with setting the tone at the top but also with embedding healthy governance, culture and controls throughout their firms, at every level.
Yes, the review explores efficiency and proportionality, but what it doesn’t do is loosen the expectations on SMFs. Regulators still expect senior managers to own their responsibilities, set the right tone from the top and cascade this throughout the firm, oversee risk and conduct and demonstrate reasonable steps.
It can be tempting for boards and executive teams to scan reviews like this one and look for signs of reduced burden, but that’s not the only message to be taken from this Review. The obligations placed on senior managers remain substantial and there is a continued focus on areas such as non-financial misconduct, culture, governance and decision making.
This means that firms must ensure their SMFs are not only skilled in their own lane, but also equipped with the behaviours and integrity that this Regime demands.
So, if you’re an SMF, use this Review as an opportunity to:
Revisit your Statement of Responsibility. Is it still accurate and reflective of what you actually do, day to day?
Strengthen your governance framework. Arre escalation routes clear and effective?
Invest in training and support – Are you, as a senior manager, prepared for emerging risks and evolving regulatory expectations?
Rather than perceiving this review as a sign of loosening, firms should treat it as a prompt to reassess and reinforce their SMCR arrangements because whatever adjustments come out of this Review, the core principles remain unchanged.