What is required in a Statement of Responsibility under SM&CR?

The new Senior Managers and Certification Regime is designed to encourage accountability within firms, aiming to prevent misconduct by improving awareness of conduct matters within firms at all levels, and ensuring that the most senior staff within organisations are given responsibility for their direct actions and for a culture of compliance.

From the implementation date, every Senior Manager will be expected to have a Statement of Responsibility – a short document that clearly defines their role and responsibilities. Since they will need to be in place from commencement, firms should be starting to think about drawing up and collating their SoRs now.

Statements of Responsibility will also need to be submitted with new applications for approval. Ultimately, they should make clear to the reader what the Senior Manager is responsible for. But what should they look like, and what do they need to include?

Guidance sets out that they should be no more than 300 words – so to the point – and while the majority of SoRs will need to abide by this guidance as a limit, in some cases – such as a single senior manager holding a number of functions, it might be necessary to slightly extend that limit so as to accurately capture all of the responsibilities. In this case, responsibilities should be separated out clearly, and duties not jumbled together – it should be clear what each section is focussed on.

In any case, the document should be succinct, without unnecessary detail, and should be self-contained – it must be readable without reference to another, separate, document.

It needs to be a single document, but not a single page, and the guidance word limit of 300 words refers to the text that directly sets out the Senior Manager’s responsibilities, and not to incidental text throughout the document. Accuracy and ease of use is key here, so each document should clearly set out which Senior Manager it refers to, their job title, the functions and responsibilities they hold, any applicable reference numbers (whether the individual’s IRN or the PR ref), and whether the Function or Responsibility is shared. All of the areas that the Senior Manager is accountable for should be captured.

Each SoR needs to include information about the responsibilities of the Senior Manager, both of the function/s they hold and any prescribed responsibilities, and importantly should aim to state what the Senior Manager does (including what they are responsible and accountable for) rather than how they do it. The description of the role and key responsibilities should be explained in such a way that someone who does not work for the firm can easily understand it.

Finally, the Statement should include a declaration of accuracy, and should be signed and dated by the senior manager.

This isn’t the end of the story, however, and Statements of Responsibility must be updated when any ‘significant’ changes happen. SUP 10C sets out more information here, but briefly, the following are examples of significant changes:

• Any variation of the manager’s approval, whether by the FCA, PRA or firm’s request, and whether any condition or time limit has been added or removed

• Fulfilling or failing to fulfil a condition on approval

• The addition or removal of any senior management responsibility

• Sharing or dividing of a SMR, or ceasing to share a SMR

• Any change that reflects a significant change to the job that the person is doing for the firm, including

• The importance to the firm of the functions being given or taken up

• Whether the seniority of the manager changes

• Whether there are changes to the identity, number or seniority of those whom the manager manages

• Whether there are changes to the skills, experience or knowledge needed by the manager for the job

Finally, firms will need to make sure that when taken together, all of their Statements of Responsibilities demonstrate that there are no gaps in the allocation of responsibility for its activities among its Senior Managers.

Our Statement of Responsibilities Template, provides the perfect basis to build your firm’s SoRs. For further information or clarity on any of the aspects of the Senior Managers and Certification Regime, contact us.

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