The Senior Managers and Certification Regime, together with a new Code of Conduct, will result in greater scrutiny of those who work in banks, large investment firms and Solvency II insurers.


The new regime will begin to come into effect on 7 March 2016 and will also be applied in due course to wholesale market activities.

For business leaders in these institutions it will mean increased accountability for their role within the business; the reversal of the burden of proof when a breach occurs in a part of the business for which they have responsibility; extended remuneration clawback periods; and the possibility of a prison sentence when making decisions which could harm a business. The new regime introduces Senior Management Functions (SMFs) which are potentially wider in scope than existing controlled functions for senior management. Without preparing for the changes now, the best people may become reluctant to take senior roles and decision-making may become more defensive.

A certification regime will apply to staff who sit below the most senior decision-makers, but who perform a function regulators believe could pose "significant harm" to a firm or any of its customers. Businesses will be responsible for certifying these individuals annually to prove they remain fit and proper for their roles, so will need to implement new internal processes.

A new Code of Conduct will apply to all staff unless they are ancillary employees who have been expressly excluded under the new rules. The current list of excluded employees is extremely narrow which means that the majority of staff would bear increased liability.

How Addleshaw Goddard can help

Addleshaw Goddard has a team with the specific skills to reduce the impact of the Senior Persons Regime and mitigate your risks. We combine regulatory, investigatory, employment law and employee benefits expertise in order to offer a comprehensive solution.

We believe in truly getting to know our clients and how regulatory changes impacts them, allowing us to tailor our service to your specific circumstances. We have a wealth of experience in conducting regulatory reviews of business functions so as to provide senior management the comfort that there are compliant systems and controls in place. Our approach is forensic, applying the minimum necessary resource required to provide you with appropriate assurance. However, where needed, we have access to a dedicated pool of over 100 specialist paralegals in our Transaction Support Team.

Our services

  • Gap analysis: to determine who will fall under the new regime and production of statements of responsibility and Management Responsibilities Maps.
  • Helping individuals understand their personal liability and navigating them through the requirements of the new regime.
  • Putting in place appropriate governance systems and controls that are robust and effective.
  • Establishing legally effective processes for certifying individuals.
  • Developing systems for responding to requests from regulators.
  • Amending employment contracts and procedures.
  • Assisting you in initial, periodic and handover reviews and assessments of governance and risk.
  • Considering how developing responsibilities interact with the Remuneration Code.

Key contact

Brian McDonnell

Brian McDonnell

Partner, Financial Regulation
London

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Video overview

Watch these short clips for insight into how the new regime will impact on regulatory, employment and employee incentive issues.

Introduction

Partner Brian McDonnell provides a brief outline of the Senior Persons Regime. 

Regulation

Brian looks at the regulatory impact of the regime. 

Employment

Partner Richard Yeomans focuses on key employment issues surrounding the regime.

Employee incentives

Partner Michael Carter discusses how the new regime will impact on remuneration.