SMCR - Senior Managers & Certification Regime for AI

Understanding SMCR

What is the Senior Managers & Certification Regime?

SMCR replaced the previous Approved Persons Regime, introducing heightened individual accountability for senior decision-makers in regulated financial services firms

Senior Managers Regime

Individuals in senior management functions hold personal regulatory responsibility for areas under their control. This includes AI governance, algorithmic decision-making, and model risk management.

Certification Regime

Firms must assess and certify employees performing significant harm functions annually. AI developers and data scientists deploying high-risk models fall under certification requirements.

Conduct Rules

All employees must comply with conduct rules including acting with integrity, due skill/care/diligence, and being open/cooperative with regulators. Applies to AI development and deployment.

Prescribed Responsibilities

SMCR Accountability for AI Systems

Senior Managers must hold clear, documented responsibility for AI governance and algorithmic accountability

Overall Responsibility for AI Governance: A Senior Manager must be allocated responsibility for the firm's AI governance framework, policies, and risk management approach.
Model Risk Management: Responsibility for model development, validation, and ongoing monitoring of AI systems used in financial decision-making.
Algorithmic Accountability: Personal accountability for ensuring AI systems comply with regulatory requirements including Consumer Duty, fair treatment of customers, and bias mitigation.
Data Governance: Responsibility for data quality, data ethics, and ensuring AI training data meets regulatory standards for fairness and representativeness.
Third-Party AI Systems: Accountability for due diligence, ongoing oversight, and risk management of externally-developed AI models and vendor relationships.
Board Reporting: Ensuring the Board receives accurate, timely information on AI risks, incidents, and governance effectiveness to fulfill their oversight duties.
Regulatory Compliance: Maintaining compliance with FCA/PRA expectations for AI governance, including documentation, explainability, and human oversight requirements.

Who Needs SMCR Compliance

Firms Subject to SMCR

SMCR applies to all FCA and PRA-regulated firms deploying AI systems in regulated activities

🏦 Banks

All UK banks, building societies, and credit unions using AI in credit decisioning, fraud detection, AML monitoring, or customer service.

📊 Investment Firms

Investment banks, asset managers, and trading firms deploying algorithmic trading, portfolio optimization, or risk assessment AI systems.

🛡️ Insurers

Insurance companies using AI for pricing, underwriting, claims assessment, or fraud detection under Solvency II requirements.

How We Help

SMCR Compliance Advisory Services

Expert guidance on SMCR accountability structures, Statements of Responsibilities, and regulatory compliance for AI governance

📋 Responsibility Mapping

Map AI governance responsibilities to Senior Managers. Create clear Statements of Responsibilities documenting individual accountability for algorithmic decision-making.

📚 Governance Framework

Design AI governance frameworks that align with SMCR requirements. Establish policies, procedures, and controls demonstrating effective Senior Manager oversight.

🎯 Regulatory Alignment

Ensure compliance with FCA/PRA supervisory expectations for AI. Prepare for regulatory reviews, supervisory visits, and demonstrate SMCR accountability.

Get In Touch

Discuss SMCR Compliance for AI

Schedule a consultation to discuss SMCR accountability structures and AI governance compliance

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Book a 30-minute consultation to discuss SMCR accountability requirements and AI governance structures.

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Email Us

For SMCR compliance inquiries and regulatory guidance on algorithmic accountability.

[email protected]

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UK Office

Trusted AI Governance Ltd
London, United Kingdom
Company No: 15696417

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Response Time

We respond to SMCR compliance inquiries within 1 business day. Advisory engagements typically start within 2 weeks.

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