The Senior Managers and Certification Regime turns on a single practical question: if something goes wrong in your area, can you show what you did about it before it went wrong. Everything else in the regime, the statements of responsibilities, the responsibilities map, the certification process, exists to make that question answerable.
The duty of responsibility
Where a firm breaches a requirement, the FCA may take action against the senior manager responsible for that area if they did not take such steps as a person in their position could reasonably be expected to take to prevent the breach occurring or continuing.
Three points follow.
It is not strict liability. The test is what was reasonable in the circumstances, given the role, the firm's size and the information available.
It is assessed on the record. Steps that were taken but not documented are difficult to evidence years later.
It is forward looking at the time. The question is what a reasonable senior manager would have done with the information then available, not what is obvious with hindsight.
What reasonable steps look like in practice
| Step | What good evidence looks like |
|---|---|
| Understanding the area | Documented review of processes, risks and controls on appointment |
| Resourcing | Assessment of capacity and capability, with escalation where inadequate |
| Delegation | Written delegation, defined scope, competence assessment of the delegate |
| Oversight | Regular MI reviewed, with recorded challenge, not passive receipt |
| Escalation | Issues raised to the board or committee, with dates and outcomes |
| Follow through | Tracking of actions to closure, with re-testing of the control |
| Handover | Structured handover note on appointment and departure |
The pattern that fails is a senior manager who received good information, did not challenge it, and cannot show what they did with it.
Statements of responsibilities and the responsibilities map
A statement of responsibilities should be specific, current and consistent with the responsibilities map. Common defects are worth checking directly.
- Prescribed responsibilities allocated to an individual who does not in practice perform them.
- Overlapping allocations that make accountability ambiguous.
- Statements not updated after a reorganisation, product launch or outsourcing arrangement.
- Responsibilities allocated to a group entity role rather than to an approved person within the regulated firm.
Where a firm relies on external providers for compliance activity, the responsibility remains with the senior manager, and the evidence of oversight of the provider becomes part of the reasonable steps record. Our guidance on retained FCA compliance support covers how that oversight should be structured.
Delegation without abdication
Delegation is expected in any organisation of scale. The senior manager must be able to show four things: that the delegate was competent, that the scope of delegation was clear, that the senior manager received and reviewed information about performance, and that escalations were acted upon.
Certification and fitness and propriety
The certification regime requires annual assessment of individuals in certified roles. Assessments that consist of a signed form with no supporting evidence do not withstand scrutiny. A defensible assessment references conduct records, competence evidence, training completion, regulatory references and any conduct rule breaches. Our guide to fitness and propriety under the certification regime covers the process in detail.
Building the record
The practical answer is a senior manager file, maintained continuously, containing the statement of responsibilities and version history, the handover note, MI received and evidence of challenge, escalations raised and outcomes, delegations and oversight evidence, training records and the annual attestation with supporting material.
The file takes a few hours a quarter to maintain and is the difference between a defensible position and a reconstructed one.
About Regulatory Counsel
Regulatory Counsel advises UK and international financial services firms on authorisation, prudential and conduct requirements, governance, financial crime and regulator engagement.
Our SM&CR work covers statements of responsibilities and responsibilities maps, senior manager reasonable steps frameworks, certification and fitness and propriety processes, conduct rules training, handover documentation and support for senior managers under supervisory scrutiny.
Contact our regulatory team at info@regulatorycounsel.co.uk.
This article is provided for general information and does not constitute legal or regulatory advice. Firms should confirm the current position against FCA publications and take advice on their specific circumstances.
Frequently Asked Questions
They are the steps a person in the senior manager’s position could reasonably be expected to take to prevent a regulatory breach occurring or continuing, judged against the role, the firm’s size and the information available at the time.
Through a contemporaneous record showing understanding of the area, resourcing assessments, documented delegation, review of and challenge to management information, escalations raised, actions tracked to closure and structured handover documentation.
The activity can be delegated but the responsibility cannot. The senior manager must evidence that the delegate was competent, the scope was clear, performance information was reviewed and escalations were acted upon.
A document setting out the areas of the firm’s business for which an approved senior manager is responsible. It must be specific, current and consistent with the firm’s management responsibilities map.
Yes. Firms must take reasonable steps to ensure that a person taking on a senior management function has all information and material they could reasonably expect to perform their responsibilities effectively.