The Senior Managers and Certification Regime (SMCR) has not brought about much regulatory action from the Financial Conduct Authority (FCA) since its launch in 2016.
A Freedom of Information (FOI) request from financial regulation consultancy Bovill found that since the introduction of SMCR in March 2016 to September this year, the FCA opened 34 investigations, closed 11 without action and only successfully enforced a fine on one occasion.
The regulator posted a notice to impose a financial penalty and prohibition for a second individual, but this decision notice has been referred to the Upper Tribunal.
This is despite the regulation being extended to approximately 48,000 solo-regulated firms in December 2019.
Bovill suggests that, in spite of the FCA’s best efforts, the effectiveness of the flagship regulation remains under question.
‘Fit for purpose’
Ben Blackett Ord, chief executive officer at Bovill, said: “SMCR was introduced to hold senior individuals in the financial sector to account. But four and a half years after it first came into effect, these numbers suggest that the regime might not have the right tools for the job.
“Questions should be asked as to why there are so few investigations and punishments, and whether SMCR is fit for purpose.
“It might have been assumed that the extension of SMCR to smaller firms would result in more investigations and enforcement actions, since it could be easier to identify the decisions made in a smaller firm, than a larger one.
“However, this does not seem to have been the case, with only 15 further cases opened and still only one fine enforced.
“We also don’t believe that the low number of enforcements is a sign that SMCR has been an effective deterrent for senior managers, since the case closed without action to enforcement ratio is high.”
