We need to know who the senior decision makers are at your firm.
Senior management functions (SMFs) are a type of controlled function.
SMFs are held by a firm's most senior decision makers, who have key responsibilities allocated to them. They play an important role:
- Running the firm.
- Protecting its consumers.
- Protecting the integrity of the market in which the firm operates.
Anyone who performs an SMF needs to be approved before they can start their role.
Examples of SMFs include:
- Chief executive officer.
- Chair of the governing body.
- Chief risk officer.
- Executive director.
- Compliance oversight.
- Money laundering reporting officer.
Which SMFs your firm needs will depend on your firm type under the Senior Managers and Certification Regime[2].
What we expect from senior managers
Being a senior manager (including individuals operating under the 12-week rule) brings with it several important responsibilities (including personal accountability), with a duty to be aware of and comply with our regulatory requirements and expectations.
Specifically, senior managers must comply with our:
- Fit and Proper test for approved persons (see our Handbook[5]).
- Individual Conduct Rules[6].
- Senior Manager Conduct Rules[7].
If a firm breaches one of our requirements, the SMF holder responsible for that area could be held accountable if they did not take reasonable steps to prevent or address the breach.
Stay up to date
Our supervision team regularly communicates with firms about:
- Our view of how firms and markets are performing.
- Our priorities.
- What we expect from firms.
In your role, you should act in line with these expectations.
What we expect from firms
Firms need to:
- Regularly review the fitness and propriety of SMFs.
- Keep the statements of responsibilities up to date.
Firms must tell us:
- About breaches of any Individual and Senior Manager Conduct Rules by a senior manager that result in disciplinary action – within 7 business days.
- If there’s a significant change[9] to a senior manager’s responsibilities – within 6 months.
Disciplinary action
If an approved person doesn't comply with our rules, we may take disciplinary action, which could include:
- A fine.
- A ban[12] on carrying out certain activities or withdrawing our approval.
- Imposing restrictions.
- Issuing a public statement about the misconduct.
An example of not complying includes if you act in a way that breaches our Senior Manager Conduct Rules[13].
