Senior Managers Regime

The Senior Managers Regime is the part of United Kingdom financial regulation under which the most senior people in a regulated firm must be approved by the regulator before taking up their roles and are held personally accountable for the areas of the business they are responsible for. It applies to banks, insurers, investment firms and other authorised firms. Its purpose is to make it clear who is answerable when something goes wrong, so that responsibility cannot be lost within committees and reporting lines.

The regime is one of three strands of the wider Senior Managers and Certification Regime (SM&CR), together with the Certification Regime and the Conduct Rules. It is operated jointly by the Financial Conduct Authority and the Prudential Regulation Authority, and it has served as a model for individual accountability rules in several other countries.

The regime grew out of the 2008 financial crisis and the later LIBOR manipulation scandal. The Parliamentary Commission on Banking Standards reported in 2013 that the existing Approved Persons Regime had failed: very few senior bankers had been sanctioned, largely because it was hard to show who had been responsible for what. Parliament legislated for a replacement in the Financial Services (Banking Reform) Act 2013.

The new framework took effect for banks, building societies, credit unions and the largest investment firms in March 2016. It was extended to insurers in December 2018 and to all other firms regulated solely by the FCA in December 2019.

The regime rests on a small number of linked obligations:

• Senior management functions. Roles such as chief executive, chair, chief finance officer, chief risk officer, head of compliance and money laundering reporting officer are designated functions. A person needs regulatory approval before performing one.
• Fitness and propriety. The firm must carry out a fit and proper assessment of each candidate before applying, and repeat it at least annually.
• Statement of responsibilities. Each senior manager has a document setting out what he or she is personally responsible for. It is submitted with the application and kept up to date.
• Prescribed responsibilities. The regulators list specific responsibilities, such as for the firm's financial crime policies or its performance of the regime itself, that must be allocated to a senior manager.
• Responsibilities map. Larger firms must maintain a single document showing how responsibilities are allocated across the firm and how its governance fits together.
• Duty of responsibility. A senior manager can be held to account if the firm breaches a requirement in his or her area and the regulator shows that the manager did not take the steps a person in that position could reasonably be expected to take to prevent it.

Below senior manager level, the Certification Regime covers staff who are not senior managers but whose work could cause significant harm to the firm or its customers, such as material risk takers and those giving investment advice. The regulator does not approve them; the firm itself must certify each year that they are fit and proper.

The Conduct Rules apply to almost all staff in a regulated firm. They include acting with integrity, acting with due skill, care and diligence, and being open and cooperative with regulators. Additional rules apply to senior managers, including taking reasonable steps to ensure that the business for which they are responsible is controlled effectively and complies with regulatory requirements. Firms must train staff on the rules and report breaches that lead to disciplinary action. The rules sit alongside a firm's conduct risk framework and its efforts to build a sound compliance culture.

A senior manager who breaches the rules can face a fine, a public censure or a ban from the industry through enforcement action. In practice, the number of enforcement cases against individual senior managers has been small, and regulators have argued that the regime's main effect is preventive.

Firms have responded by documenting decisions more carefully, clarifying the remit of the board of directors and committees such as the board risk committee, and defining how delegation works. Senior managers commonly keep records of the reasonable steps they have taken. The clear allocation of duties supports the wider principle of accountability and fits with the three lines model of risk governance.

Supporters say the regime has sharpened senior attention on risk and conduct. Critics point to the administrative load, slow approval of appointments and a tendency towards defensive record-keeping. Some argue that the scarcity of enforcement outcomes shows that the original aim of holding individuals to account has not been met. The UK government and the regulators began a review of the regime in 2023. A first set of rule changes, intended to reduce its burden while keeping its core principles, was finalised in April 2026, and wider changes that need legislation are planned.

Other jurisdictions have adopted similar approaches. Australia introduced the Banking Executive Accountability Regime and later replaced it with the broader Financial Accountability Regime. Hong Kong applies a Manager-in-Charge regime to licensed corporations, Singapore has issued guidelines on individual accountability and conduct, and Ireland has introduced a Senior Executive Accountability Regime. Each requires firms to identify senior individuals, document their responsibilities and hold them to a standard of reasonable steps.

• Financial Conduct Authority: Senior Managers and Certification Regime
• Bank of England: Prudential Regulation Authority