The Senior Managers & Certification Regime (SM&CR) will be introduced across the financial services industry on December 9 2019. The introduction of the Regime will have a significant impact on most regulated firms, so these firms would do well to listen to the views of senior management in the banking sector, who were faced with the task of implementing SM&CR some three years ago.

With this in mind, the Financial Conduct Authority (FCA) has produced a video in which four retail and investment banking leaders share their experiences. The participants in the 8-minute video are:

  • Dame Jayne-Anne Gadhia, former CEO of Virgin Money
  • Jon Symonds, Deputy Group Chairman at HSBC
  • Liz Nolan, CEO of Europe, Middle East and Africa (EMEA) at State Street
  • Vis Raghavan, Chief Executive Officer of EMEA at J.P. Morgan

The film opens with Jonathan Davidson, Director of Supervision – Retail and Authorisations at the FCA, saying:

“SMCR is very simple, but its effects are radical – they are going to shift the culture of financial services.”

He went on to say that the regulator wants to see two main outcomes of the Regime:

  • Everyone working in financial services should realise that a high standard of conduct is expected of them, and that this goes beyond a tick-box compliance approach
  • Business leaders recognise they are not just responsible for their own actions, but have a responsibility to set the right example

Ms Nolan referred to the Regime having delivered “better individual accountability through transparency, clarity and support”. She also spoke of how her firm ensures that management are provided with the right management information to enable them to carry out their responsibilities.

 

Mr Raghavan said that it had “re-inforced what we stand for” with regards to culture and conduct. He acknowledged that the Regime “requires a lot of planning” and stressed that its requirements must be implemented at Board level and not “delegated to HR, compliance or any other function”.

 

Dame Jayne-Anne said it “codifies and professionalises what it means to be a senior person in an important industry.” She later described a conversation with FCA chief Andrew Bailey, who told her that the SM&CR requirements were actually “what [firms] should be doing already.” She also referred to one of the key concepts of the Regime, which is that responsibilities should not only be allocated to individual senior managers, but that they should be documented as well – each Senior Manager will need to have their own written Statement of Responsibilities. Later, she said “the essence of the Senior Managers Regime isn’t trying to trip us up, isn’t trying to put us in prison, it is to show that everybody does understand what is asked of them”.

 

Mr Symonds suggested that his bank had previously neglected the issue of exactly who was responsible for certain projects and tasks and described the Regime as “exactly what we needed”. Addressing the issue of individual accountability, he commented “it gives the regulators a much easier hook to put people on when things go wrong”, but then counterbalanced this by saying “if people are clear about their roles, responsibilities and accountability … it actually improves the quality of control over the business that is overall beneficial”.

 

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article