Reviewed by Matthew Bartlett, Director · Last reviewed 9 July 2026
Financial services firms carry the highest concentration of statutory personal accountability of any UK sector. The Senior Managers and Certification Regime pins named individuals to defined responsibilities, and the FCA and PRA can pursue those individuals directly. This entry sets out how D&O responds to SMCR-driven investigation and enforcement, what changes for PRA-regulated firms, and where the wording features of a financial-services D&O tower need particular attention.
SMCR was extended to all FCA solo-regulated firms from December 2019, following its introduction for banks and insurers earlier in the decade. Senior Management Functions (SMF1-19 for the largest firms, with a smaller allocation for limited-scope firms) are held by named individuals, each with a formal Statement of Responsibilities. When something goes wrong, section 66 of the Financial Services and Markets Act 2000 gives the FCA the power to take enforcement action against approved persons, and section 63A gives it the power to impose financial penalties on senior managers directly.
The Consumer Duty (PRIN 2A) took effect for open products from July 2023 and for closed products from July 2024. It requires senior managers under the SMCR to attest that their firm is delivering good customer outcomes across four defined outcomes and to record what evidence supports the attestation. That attestation is personal, and it creates a documentary trail that becomes exhibit one in any subsequent enforcement action.
PRA-designated firms carry a parallel regime under FSMA Part V. The PRA can prohibit individuals, censure them, or impose financial penalties, and the PRA’s expectations of board oversight of prudential risk are set out in the PRA Rulebook and the various sourcebooks and supervisory statements.
Side A covers the individual senior manager when the firm cannot or will not indemnify. Given that FSMA financial penalties against individuals are personal debts that a firm often cannot lawfully pay for, Side A cover for legal defence costs of regulatory investigations is central. Side B reimburses the firm for indemnifying its officers. Side C responds to securities claims for listed firms and holding companies. Extensions worth attention are pre-claim investigation costs (a regulator’s formal information request under FSMA section 165 is typically the first trigger), employment practices liability, and outside directorship.
Financial penalties themselves are generally not insurable as a matter of English public policy where they are imposed for deliberate or reckless wrongdoing. Deliberate dishonesty and improper personal profit are excluded once established by final adjudication. Prior known circumstances are excluded — and given the scale of documentary evidence in regulated firms, the fair-presentation obligation at proposal is unusually broad. Bodily injury and property damage sit on other policies. Claims by one insured against another are excluded save for standard carve-outs.
Financial Services and Markets Act 2000 — section 59 (approved persons); section 63A (financial penalties on senior managers); section 66 (disciplinary powers); section 165 (regulator information requirements); Part V (permission and approvals). Financial Services (Banking Reform) Act 2013 for the origins of SMCR. Senior Managers and Certification Regime (SYSC 25-27 in the FCA Handbook). Consumer Duty (PRIN 2A). Anti-money-laundering: Money Laundering Regulations 2017 and Proceeds of Crime Act 2002 senior officer duties. Companies Act 2006 sections 171-177. Insurance Act 2015 sections 3, 7 and 8. Bribery Act 2010 sections 7 and 14 for senior officer consent or connivance.
D&O covers the senior manager’s decisions as a senior manager — how the firm was run, governed, capitalised, staffed and reported. Professional indemnity covers advice or services delivered to the firm’s clients — a personal recommendation, a pension transfer analysis, a discretionary portfolio decision. Where a client complaint escalates into a Financial Ombudsman Service determination and then a regulator’s enforcement investigation into the senior manager, both towers are engaged. A specialist broker aligns the definitions, the notification triggers, and the retro-dates so that a real event finds a real home.
A wealth manager receives a section 165 information notice from the FCA following a supervisory review of Consumer Duty implementation. The SMF3 executive director and the SMF16 compliance oversight function holder are named individually in the correspondence. Personal defence of the two senior managers through the information request, follow-up interviews under caution and any Enforcement Warning Notice runs on the D&O tower. Side A responds because a resulting section 63A penalty is not lawfully payable by the firm; Side B reimburses the firm where the firm has stepped in to indemnify legal costs. Pre-claim investigation costs pick up counsel from the day the section 165 notice arrives. The wording of the ‘wrongful act’ trigger and the ‘insured person’ definition need to reach the two SMF holders in their SMF capacity, not just their director capacity — a specialist broker checks this.
Apex Insurance Brokers is FCA authorised (FRN 724952) and places D&O for FCA solo-regulated and dual-regulated firms — IFAs, wealth managers, DFMs, small banks, insurance intermediaries, payment institutions, e-money institutions, mortgage brokers and consumer credit firms. We work with Lloyd’s syndicates and specialist company markets that understand SMCR enforcement patterns, Consumer Duty docum