BOE releases consultation on extension of SM&CR to insurers

Today the PRA has published proposals to extend the Senior Managers and Certification Regime (SM&CR) to insurers. These proposals seek to implement a consistent but proportionate regulatory framework to strengthening individual accountability and promoting effective corporate governance for all PRA-regulated firms.

In March 2016 the PRA implemented the Senior Insurance Managers Regime. The proposals would update this regime to align with the equivalent regime for deposit takers while reflecting the unique characteristics of insurers.

In relation to Certification the PRA proposes to:

  • require insurers to annually assess and certify the fitness and propriety of employees performing functions deemed capable of causing ‘significant harm’ to the firm or its customers;
  • apply the PRA’s Conduct Rules to all key function holders and material risk-takers at large insurers;
  • require firms to notify the PRA of internal disciplinary action against individuals within scope of the SM&CR due to breaches of the Conduct Rules.

For Senior Managers, the regime would include:

  • the ability for the PRA to approve Senior Managers in insurance firms subject to conditions and time limits; and
  •  a statutory duty of responsibility, which will enable the PRA to hold Senior Managers in insurance firms accountable if a breach of a regulatory requirement takes place in their area of responsibility and the Senior Manager failed to take reasonable steps to prevent or stop the breach.

The consultation will close on Friday 3 November 2017.