How Will The Extended SMCR Apply To NEDS?

The Financial Conduct Authority (FCA) has consulted on the way in which the senior managers and certification regimes (SMCR) will be rolled out to all authorised firms, probably from next year. From the inception of the SMCR, the FCA has faced some difficult decisions on how (and whether) to apply it to non-executive directors (NEDs). The extension of the SMCR to all authorised firms has offered it the opportunity to address this question again. The new rules it has drafted create a variety of obligations both on firms and on NEDs, but there are key areas of uncertainty that remain.

NEDs and the SMCR – the status quo

For those firms currently operating under the SMCR, the position of NEDs is broadly as follows. Certain senior management functions (SMFs) designated by either the Prudential Regulation Authority (PRA) or the FCA as controlled functions (which an individual needs regulatory approval to perform) must be performed by a NED. Other NEDs do not require