SMCR Fit and Proper Test Deadline Approaches

SMCR Fit and Proper Test Deadline Approaches

In September 2020, the FCA requested to extend the SMCR (Senior Managers & Certification Regime) deadline beyond December by the Treasury. The request was granted and as a result, firms were given a longer window to ensure the fitness and propriety of Certified Persons.

What is the SMCR?

The SMCR is a regulatory framework for the conduct and responsibility of key personnel within an organisation. The framework applies to senior management and those who are in potentially high risk roles that could have a significant impact on a business or institution.

“SM&CR aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence” – FCA, 2015

What is a “Fit and Proper” SMCR test?

Within the SMCR assessment, firms are expected to take appropriate measures to assess the honesty, integrity and reputation of the person in question. Staff in senior roles are required to be reviewed to ensure that they are “Fit and Proper” enough to perform their duties.

This is where Neotas come in. Robust screening practices can be a crucial aspect of this assessment, proving that the information provided is accurate and substantial enough to meet regulatory requirements. 

What’s expected by the regulators for SMCR?

The minimum expectation based on regulations by the FCA is a standard criminal background check, such as a DBS check. While useful, it’s easy to see the limitations of these checks. These are database checks only and reveal little about the honesty or integrity of the candidate.

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While this is the minimum requirement by regulation, it may do little to pardon businesses in the future should they face any damning allegations. If the information is there, in the public realm, wouldn’t you want to know about it? Furthermore, claiming to not know it’s there may do little to appease regulators.

Lastly, there is also a requirement to re-certify individuals at least once a year. This shows that a robust, future proof, time-efficient solution is needed – especially for larger organisations.

What penalties can you face for not submitting by the SMCR deadline?

The FCA has the right to enforce penalties against a company or individual for not submitting before the deadline. Disciplinary action could include full investigation, financial penalties, even launching legal proceedings.

When is the SMCR deadline?

Businesses must ensure senior managers and appropriate personnel are compliant by the new deadline of 31st March 2021.

What testing should we do?

Businesses should absolutely aim to ensure that they are compliant to the minimum guidelines and beyond. 

Using objective, third party screening providers like Neotas for the honesty, integrity and reputation element of the Fit and Proper testing will help lower internal business risks and stay compliant with the latest regulations.

Schedule a call with our team today to make sure you hit the SMCR deadline.