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Four steps for getting ahead on SM&CR

08/01/18

47,000 firms across financial services will be impacted by the extension of the Senior Managers and Certification Regime (SM&CR) when it comes into force. SM&CR will strengthen the regulator’s focus on individual accountability, culture and governance.

Although we are still awaiting the final rules, the regulator published a series of consultation papers in December which provide useful insight on what the rules are likely to be.

Phil Deeks, Technical Director, provides our steps to help you ensure a smooth transition to the new regime.

  1. Adopt a proactive approach: First of all, familiarise yourself with how SM&CR has been applied to the banking industry. The FCA is seeking to bring greater consistency across the whole financial services industry, so we would expect the Regulator to broadly use the same tools and principals in use within the banking sector. Given this insight, you should consider how the Regime will affect your particular business.
  2. Identify individuals in scope: You need to identify and assess the senior managers that are within scope under the Regime and assess their propriety. This includes employees performing regulated activities, particularly those who have the potential to cause significant harm.
  3. Assess culture and governance: An assessment should be carried out to determine the transparency and effectiveness of governance arrangements. A key component within the assessment should focus on whether your culture is customer-centric and meets the FCA’s expectations around individual accountability.
  4. Align policies and processes: SM&CR will impact current policies and process and also require the development of new ones. Existing policies, such as ‘whistleblowing’, will need to be reviewed to ensure they maintain alignment with the incoming Regime and be updated if required. New processes will also need to be devised, for example, assessing and recording the fitness and propriety of individuals and reporting conduct rule breaches.

SM&CR is set to be quite a headache for some compliance professionals in 2018. We have been talking with a number of firms and individuals over the past six months about the best ways to get prepared.

Do not get left behind. Be proactive and start thinking about what you need to do now. Speak to one of our regulatory experts to find out how we can help you get ready for SM&CR.

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