Before the end of this year, all financial services will be subject to the requirements of the Senior Managers and Certification Regime (SM&CR). Financial Conduct Authority (FCA) speakers have for some time been talking about the Regime, and how it requires firms to adopt a corporate culture that promotes ‘doing the right thing’ and achieving ‘good customer outcomes’. A number of these FCA speakers have also suggested that the regulator cannot bring about a change in firms’ culture simply by imposing new rules and have implied that a positive corporate culture can only be achieved if firms’ senior management are genuinely keen to take action in this area. In a recent FCA podcast, the regulator’s chief executive Andrew Bailey commented that firms should “do the right thing, rather than just do what the rule says.” He said some firms had made “big changes” in this area, but that there was “much more to do”.
SM&CR will also affect almost everyone who works in financial services, as the Regime has three separate components.
Anyone newly appointed to a senior manager role will need approval from the FCA before they commence carrying out their functions. Existing senior managers, and any that are approved by the FCA after the introduction of the Regime, will then need to be assessed by their firm on an annual basis to ensure they remain fit and proper to carry out their roles. Every senior manager will need a Statement of Responsibility which sets out what they are responsible for.
Individuals who are not senior managers, but whose role nonetheless carries a risk of significant harm to the firm or any of its customers, will not need individual approval by the FCA at any stage. However, they will still be subject to annual checks of their fitness and propriety by their firms.
Almost all employees of financial services firms will then need to follow five basic Conduct Rules relating to integrity; skill, care and diligence; co-operation with regulators; interests of customers; and market conduct. These five rules could be said to be the financial services equivalent of the Hippocratic Oath for healthcare professionals.
In view of the significant changes that will result from the introduction of SM&CR across the industry, the Personal Investment Management & Financial Advice Association (PIMFA) has made its webinars and podcasts available to all firms, not just those who are members of the Association.
Philip Allen, Head of Learning & Development at PIMFA, said:
“The SM&CR regime will be a major project for all firms, large and small, and there will be a significant amount of work required in order for firms to be fully compliant before the deadline. Our new learning and development platform will allow investment managers and financial advisers an opportunity to learn and develop new skills direct from their desktops, tablets and mobile phones, anywhere in the world.”
Firms will be expected to have adopted the Regime in full by December 9 2019, so there is a little over six months for firms to complete their preparations. Seeking assistance from a professional compliance consultant is of course highly recommended as it is vitally important firms understand everything they need to do ahead of the deadline.
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