The Senior Managers and Certification Regime (SMCR) is a regulatory framework designed to enhance accountability and integrity within the UK’s financial services sector. Introduced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), SMCR ensures that individuals in key roles meet stringent fitness and propriety standards.
For HR professionals responsible for recruitment and compliance in financial services, implementing comprehensive pre-employment and ongoing screening is crucial. Below, we break down the essential checks required for SMCR compliance and best practices to strengthen due diligence processes – but if you’d prefer to discuss the matter with one of our screening experts, you can skip straight to contacting us, right here.
Verifying regulatory references
One of the most critical SMCR compliance requirements is obtaining regulatory references in accordance with FCA SYSC 22. Firms must collect six years of employment history for senior managers and certification staff. These references provide insight into an individual’s fitness and propriety, including any disciplinary actions, misconduct, or regulatory breaches.
What this includes:
- Verification of previous employment history in regulated roles.
- Confirmation of any past regulatory breaches or disciplinary actions.
- Insights into an individual’s integrity, competence, and compliance record.
Regulatory references help firms identify potential risks before appointing individuals to critical roles, ensuring compliance with FCA guidelines and safeguarding business integrity.
Assessing financial integrity
HR professionals must also conduct financial integrity checks to assess whether a candidate has a history of financial distress that could impact their suitability for a role in financial services.
What this includes:
- Credit History Checks – Reviewing outstanding debts, defaults, and credit score risks.
- County Court Judgments (CCJs) & Bankruptcies – Identifying any insolvency records that could indicate financial instability.
- Directorship & Disqualification Checks – Ensuring individuals have not been banned from holding company directorships.
- Sanctions Screening – Cross-referencing individuals against global financial crime watchlists and politically exposed persons (PEPs) databases.
Financial soundness is a key factor in SMCR’s Fit and Proper test. Candidates with a history of serious financial issues may pose a risk to regulated firms, particularly in roles where they handle client assets or sensitive financial information.
Confirming fitness and propriety
To comply with SMCR, firms must assess the fitness and propriety of all Senior Managers and Certification Staff before appointment and on an ongoing basis.
What this includes:
- Criminal Record Checks (DBS) – Conducting Standard or Enhanced DBS checks for Senior Managers to identify any past convictions, cautions, or warnings.
- Professional Qualifications Verification – Ensuring individuals hold the necessary qualifications, accreditations, and industry certifications required for their role.
- Right-to-Work Verification – Confirming legal eligibility to work in the UK, ensuring compliance with UK immigration laws.
Our solutions also incorporate structured assessments and due diligence checks designed to evaluate an individual’s honesty, integrity, competence, and financial soundness. By using tailored questionnaires and risk-based analysis, we help firms gain deeper insights into candidate suitability while ensuring compliance with best practices reducing the risk of misconduct or regulatory breaches.
Ensuring ongoing compliance
SMCR compliance doesn’t end at hiring, firms are required to continually monitor the fitness and propriety of individuals in regulated roles.
What this includes:
- Annual certification review – Certification Staff must undergo an annual reassessment to confirm they remain fit and proper for their roles.
- Continuous monitoring – Tracking changes in an individual’s status, such as new financial distress indicators, regulatory sanctions, or criminal convictions.
- FCA/PRA register checks – Verifying whether individuals hold the necessary regulatory approvals and ensuring they are not subject to bans or disciplinary actions.
Failing to reassess and monitor key individuals could result in regulatory penalties, reputational damage, and operational risks. Ongoing compliance ensures that issues are identified early, preventing potential misconduct.
Meeting global compliance requirements
For firms hiring internationally, SMCR compliance requires robust global background screening to ensure individuals meet the same fitness and propriety standards.
What this includes:
- International Criminal Record Checks – Conducting police checks and criminal record screenings across 220+ countries.
- Global Qualification Checks – Verifying international degrees, certifications, and accreditations.
- Cross-Border Regulatory Screening – Checking candidates against international regulatory databases, financial crime watchlists, and industry blacklists.
In a globalised workforce, many professionals have worked or studied abroad. These checks ensure firms do not overlook key regulatory risks when hiring international candidates.
Why comprehensive SMCR screening matters
Regulatory compliance under SMCR requires HR teams to implement rigorous background screening. By ensuring thorough checks at every stage of employment, firms can:
- Reduce compliance risks and avoid FCA penalties.
- Safeguard financial integrity by hiring the right people.
- Ensure a culture of accountability in line with regulatory expectations.
- Enhance reputation and trust in the financial services industry.
By leveraging comprehensive pre-employment screening and continuous monitoring, firms play a critical role in upholding SMCR standards, ensuring the highest level of governance, transparency, and regulatory compliance.
Need support with SMCR Screening?
Giant Screening’s SMCR-aligned solutions help firms meet all FCA-mandated requirements, from regulatory referencing and financial integrity checks to global background screening. Contact us today to ensure your firm’s compliance with confidence.
