TISA backs SMCR reforms to reduce burdens & raise standards

The Investing and Saving Alliance has expressed support for proposed changes to the Senior Managers & Certification Regime aimed at reducing regulatory burden and improving proportionality in the financial services sector.

Responding to consultations launched by the Financial Conduct Authority and HM Treasury, the alliance reflected the views of its 270 member firms and the industry's desire for a framework that balances streamlined processes with the continued promotion of accountability and high conduct standards.

Phil Turnpenny, Policy Executive at The Investing and Saving Alliance (TISA), commented on the submission and the direction of the proposed changes.

"We warmly welcome the intent behind these reforms. SMCR has helped raise standards across financial services, and now is the right time to refine the regime to better reflect how firms operate today. Our members support the proposals and see real potential to reduce administrative burden while maintaining the regime's integrity."

"We look forward to continuing our engagement with both the FCA and HM Treasury to help shape a regulatory framework that is proportionate, effective, and fit for the future."

The SMCR was introduced with the goal of increasing individual responsibility and transparency at the management level in financial services firms. While it has been widely credited with raising governance standards, the complexity and administrative demands of the regime have been cited as a challenge by industry participants.

Consultation highlights

TISA's consultation responses call for more clarity on certain aspects of the proposed reforms, particularly in terms of implementation. Among its key recommendations, the organisation has highlighted the need to establish a clear roadmap connecting the expected 'Phase 1' and 'Phase 2' changes to support firms in planning investments in governance systems.

The alliance has voiced support for the FCA's move to simplify the Senior Manager Function approval process, noting that approval timelines can currently exceed six months due to delays not captured by service metrics. TISA believes that streamlining the number of senior management roles and prescribed responsibilities could help reduce operational pressures while retaining appropriate governance standards.

Rule changes and interim appointments

TISA has indicated full support for a proposal to extend the 12-week rule for interim senior management appointments and emphasised the importance of clear guidance on applying Conduct Rules during these interim periods to avoid any inadvertent breaches by affected individuals.

The alliance argues that the approval process for experienced senior candidates should be made more flexible. It has also welcomed initiatives aiming to bring greater alignment between FCA and Prudential Regulation Authority requirements for dual-regulated firms.

Future reforms and certification regime

Looking ahead, TISA encourages the FCA to pursue broader reforms in the second phase of the process. Suggestions include simplifying categories within the certification regime and governance documentation, as well as providing more practical guidance on regulatory references and Conduct Rules. The group suggests that these changes could promote more effective implementation across firms.

In reply to the Treasury's consultation, TISA has supported a more streamlined certification regime, provided that it continues to promote individual accountability. The alliance has recommended eliminating unnecessary duplication and suggested that the Treasury reconsider the current six-year window for enforcement of individual conduct breaches in favour of an approach perceived as more proportionate and fair.

International considerations

TISA's submission also draws attention to the difficulties faced by firms with international operations when appointing overseas individuals to UK-regulated positions. The current application process is described as lengthy and complex, which may disrupt governance and deter global talent from being attracted.

The organisation views this as an area deserving further attention as reforms progress, noting the importance of enabling international firms to access the full range of talent without unnecessary obstacles.

TISA's recommendations and responses have been shaped through engagement with a broad cross-section of financial services providers, including investment managers, banks, insurance companies, wealth managers, and a range of associated service providers. The alliance continues to liaise with both regulators as part of its efforts to help inform and shape the future structure of regulatory oversight in the sector.