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FCA-regulated firms have embraced the Senior Managers and Certification Regime, or SMCR, for several years. With non-financial misconduct under the FCA’s spotlight, businesses must keep up with the fitness and propriety assessment for their staff to minimise the conduct risks. The question for Compliance Officers is: how can you do this in an efficient and effective manner?
Under the SMCR, firms are required to conduct an annual Fitness & Propriety (F&P) certification process. This recurring task is often seen as time-consuming and documentation-heavy, requiring extensive record-keeping processes and tight internal coordination. It can become both a burden and a risk – especially when not managed efficiently.
The FCA has made it clear that F&P isn’t just a checkbox exercise: it’s a key part of promoting integrity and accountability in financial services. As part of its broader efforts, the FCA continues to prioritise tackling non-financial misconduct. In a letter on 11 March 2025, the FCA reiterated its commitment to addressing behaviours like bullying, harassment, and discrimination. It also identified a lack of transparency in information disclosure to client and market distortion practices, noting these contribute to poor outcomes for consumers and markets.
This builds on the regulator’s findings of its Culture and Non-Financial Misconduct Survey published in October 2024, which highlighted that non-financial misconduct incidents increased and the need for firms to address the conduct risks and these issues properly.
What are the common pitfalls to look out for?
We consider these to be common gaps that can be closed by enhancing your F&P processes:
- Lack of a clear, consistent approach to non-financial misconduct in F&P assessments
- Limited post-onboarding checks for staff
- Variability in how often firms refresh assessments
Given the FCA’s direction of travel, firms should consider strengthening their F&P processes by including the following checks every two to three years:
- DBS and credit checks
- Adverse media screening
- PEP identification (direct and by association)
- Ongoing staff self-assessments, including the issuance of SMCR certificates
Higher-risk roles may warrant more frequent reviews, while other certified functions or Conduct Rules staff could be assessed on a less frequent, risk-based schedule. Such higher-risk roles include Senior Management Functions and individuals certified as Material Risk Takers or holding a significant management function.
By adopting a proactive, tech-enabled approach, firms can transform the F&P process from a regulatory headache into a seamless part of their risk management and governance strategy.
How can Bovill Newgate help you streamline your SMCR compliance programme?
Our tech-enabled services are designed to streamline the entire process, from onboarding to annual certification, helping you meet regulatory obligations with ease and confidence. By tapping into our experts’ knowledge, we can help you save time and minimise risks so that you’re prepared for any level of regulatory scrutiny.
- End-to-end managed services: Taking care of your processes including DBS and credit checks, regulatory references, sanctions screening, PEP identification (direct and by association), and adverse media checks.
- F&P questionnaire platform: Helping your staff complete self-declarations, and ensuring the outcomes are easily recorded and tracked.
- Certification and directory updates: we can generate SMCR certificates and handle Directory Person confirmations on the FCA’s Connect system on your behalf.
Get in touch if you’d like to discuss how we can help you navigate the SMCR requirements.
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