1. June 2015
Individual Accountability,
Cultural Culpability:
The New Senior Managers
and Certification Regime

2. “As the primary framework for regulators to engage
with individual bankers, the Approved Persons Regime
is a complex and confused mess”
Changing Banking for Good – Parliamentary Commission on Banking Standards
Following recommendations made in 2013 by the Parliamentary Commission on Banking
Standards (PCBS), the Financial Conduct Authority (FCA) and Prudential Regulation
Authority (PRA) have proposed changes to the way individuals working for relevant firms
are supervised and held accountable for the roles they perform.The new Senior Managers
and Certification Regime (SMCR) introduces specific responsibilities and conduct rules with
the over-riding aim of raising standards in banking.These changes represent a considerable
operational challenge and the related requirements will necessitate a different supporting
process, infrastructure, systems and tools.The new regime is intended to be a step-change
in individual accountability, and effective implementation will require board driven focus.
KPMG has a strong understanding of the underlying objectives, principles and direction behind
the recommendations made by the PCBS. Our experts have closely followed the PCBS report
as well as the regulators’ response to these recommendations, detailed in the July 2014
consultation paper titled “Strengthening Accountability in Banking”. We are advising numerous
financial services firms on culture, conduct, governance and accountability and have a strong
understanding of regulatory thinking locally and globally which we believe gives us unique insight
on policy developments.
There are three parts to the new regime:
Senior Managers Regime
• Covers board (excluding
standard non-executive
directors), the Executive
Committee and others
who require regulatory
pre-approval
• Requires ‘Statements
of Responsibilities’
and a ‘Management
Responsibilities Map’
• Operates under the
‘presumption of
responsibility’ with respect
to regulatory breaches in
the firm
• Criminal sanctions for
reckless mismanagement
of a firm
Certification Regime
• Covers remaining Significant
Influence Function (SIF)
holders plus other staff who
can cause ‘significant harm’
to the firm and/or customers
• Population aligned to Material
RiskTakers (MRTs) for the
PRA, wider regime proposed
by the FCA
• Must be self-supervised and
‘certified’ as fit and proper by
the firm annually
• Subject to civil sanctions
Conduct Rules
• Apply to senior managers,
certified staff and non-
ancillary staff
• All suspected and actual
breaches of conduct rules
must be reported to the
regulator within 7 days
(Senior Managers & MRTs)
or 90 days (all other non-
ancillary staff)
• Need for much wider
training, breach tracking and
notifications to bring about
cultural change
- This will require tailored,
role-specific training to
all staff who deal with
UK clients
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

3. Senior Mana
POTENTIAL IMPACTS OF THE SMCR
SMR oversight
Responsible for the firm’s performance of its obligations
under the Senior Managers Regime, including implementation
and oversight
Certification regime
Responsible for the performance of the firm
of its obligations under the Certification Rules
Conduct
The CEO must help drive the setting
and enforcement of standards for
individual conduct across the business
Culture
Responsible for leading the
development of the firm’s culture
and standards in relation to the
carrying on of its business and
the behaviours of its staff
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

4. g ers Regime
ON THE CHIEF EXECUTIVE OFFICER
Data/IT
The CEO must be consulted in
regard to the firm’s recovery
plan and resolution pack and
must help oversee the internal
processes regarding their
governance
Business model
Responsible for the development and
maintenance of the firm’s business model
Responsibilities map
Responsible for compliance with the rules
relating to the firm’s management
responsibilities map
Responsibility allocation
The CEO is responsible for ensuring complete
allocation of all prescribed responsibilities
under the SMR
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

5. There are four main areas we believe will be most
impacted by the new regimes:
Governance
The regimes ultimately require robust and well evidenced
governance frameworks including clear articulation of legal
entity level committee structures and their respective roles
and responsibilities.
Policies and Procedures
The new regimes will cover a significantly wider population with the
addition of the certified and conduct layers, and firms will need to
design robust frameworks, especially for the certified regime. Self-
supervision of a significant population in the certified regime is new
and a considerable challenge.
Data, Systems andTechnology
The increased focus on evidentiary requirements means the
regimes will require quality management information to underpin
responsibilities.There is also an opportunity to automate and
streamline many of the requirements of the regime using
technology solutions.
People and Culture
One of the key aims of the new regime is to transform the
culture and raise standards in banking. As a result, the SMCR
necessitates changes to capabilities, culture and HR processes to
underpin behavioural change.
How we can help:
KPMG’s breadth of experience and expertise across these four areas and the specific
engagements we are running on SMCR implementation gives us a real advantage in helping
firms with bespoke solutions for the new regime which not only meets requirements but which
enhances the existing governance arrangements.
Contact us to find out how we can help you.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

6. INDUSTRY INSIGHT
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Source: KPMG 2015
41%
of survey respondents cite
responsibility mapping as the
most challenging of the regime
requirements.
Close to
50%
anticipate that the regime will have
a greater than expected impact on
an organisation.
Over
70%
of respondents think that the
new regime will drive greater
accountability and strengthen
accountability across the industry.
Over
35%
think that the Board and ExCo will
be most impacted by the changes.

7. Contact us
Suvro Dutta
Banking Partner
020 7311 1466
suvro.dutta@kpmg.co.uk
Kara Cauter
Risk Consulting Partner
020 7311 6150
kara.cauter@kpmg.co.uk
Giles Adams
Risk Consulting Partner
020 76942143
giles.adams@kpmg.co.uk
Anthony Donohoe
Risk Consulting Director
020 7311 1570
anthony.donohoe@kpmg.co.uk
ZoeYoung
Director
020 7311 5524
Zoe.Young2@KPMG.co.uk
www.kpmg.co.uk
The information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. Although we endeavour to provide accurate
and timely information, there can be no guarantee that such information is accurate as of the
date it is received or that it will continue to be accurate in the future. No one should act on
such information without appropriate professional advice after a thorough examination of the
particular situation.
© 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network
of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or
trademarks of KPMG International.
OLIVER for KPMG l OM032623A l June 2015