Performance of functions relating to financial market infrastructure Proposed Senior Managers & Certification Regime
The key features of the SM&CR are similar to the existing SM&CR for banks, insurers and other authorised persons, which is set out in Part 5 of FSMA 2000. Upon HM Treasury applying the regime to a particular type of firm, the relevant regulator will be granted new powers to implement, supervise and enforce the following:
A Senior Managers Regime. This gives the regulators the power to determine whether individuals who perform roles that pose a potential risk to the firm or to business or other interests in the UK have the appropriate competence, expertise and personal characteristics (such as integrity) to carry out their roles.
A Certification Regime. This requires firms to certify as fit and proper any employee (including contractors and secondees) who performs a "specified function" that could cause significant harm to the entity or its consumers.
Conduct rules. These apply to all employees (including contractors and secondees), and set minimum, high-level requirements regarding the conduct of individuals at these systemically important entities.
	The Bank and the FCA will have the power to impose penalties where an individual performs a senior management function without approval, and the individual knew, or could reasonably be expected to have known, that they were doing do so without approval. The Bank and the FCA would also have the power to take action against an individual for misconduct.
	As a complement to the SM&CR, the Bank and the FCA will have the power to make prohibition orders, analogous to the existing powers that the FCA and the PRA have to make prohibition orders under Part 5 of FSMA 2000. If it appears to the Bank or the FCA that an individual is not a fit and proper person to perform a function in relation to an activity carried out by a type of firm that they regulate and which is within scope of this SM&CR, they will be able to make an order prohibiting that individual from performing any function in a particular firm, type of firm or any firm covered by the new SM&CR. The Bank and the FCA can also, where appropriate, make provision under this section preventing an individual from performing regulated activities at an authorised person, exempt person, or person to whom the general prohibition does not apply as a result of Part 20 of FSMA 2000. This will allow, for example, the Bank to issue a prohibition order that prevents an individual not only from performing functions in respect of activities carried out by a CCP, CSD, RIE or CRA, but also within any other type of entity subject to the SM&CR in Part 5 of FSMA 2000.
	The Act makes it a criminal offence for an individual to perform a function in breach of a prohibition order. Other criminal offences that already apply to individuals in these firms under existing legislation would also be extended to encompass the SM&CR. For example, individuals would be guilty of an offence if they knowingly or recklessly provide false or misleading information to the regulator in relation to the regime.