One of the key ideas of the Senior Managers Regime will be the ability of the Financial Conduct Authority (FCA) to hold senior managers responsible for compliance failings within their area of responsibility. The new rules, to be introduced when the Regime comes into effect across financial services on December 9 2019, will require all designated Senior Managers to have a documented Statement of Responsibilities (SoR).
The FCA says that:
“The purpose of a SoR is to make clear what a Senior Manager is responsible and accountable for, under the ultimate accountability of a firm’s governing body.”
“It should be clear and easy for regulators, the Senior Manager and others in the firm to understand it. The SoR should contain enough information to clearly describe the Senior Manager’s actual responsibilities and accountabilities, but without unnecessary detail. A SoR needs to be self-contained and not refer to other documents.”
The regulator also clearly sets out what an SoR isn’t, and what it should not contain:
“A SoR is not the same as a job profile, so it should not describe the competencies and skills required for the role or how the responsibilities should be discharged. It should focus on what the role holder is accountable for.”
A good starting point when a firm draws up an SoR for one of their senior managers is to list the business functions and activities for which they are responsible, such as sales, customer service, complaints, information technology, marketing, risk management, training, protection etc.
New strategic initiatives, business transformation programmes or mergers are examples of less common things that managers might be responsible for, but these are still significant responsibilities, and should still be included in their Statement where applicable.
The FCA’s guidance consultation on SORs suggests the following text for a manager who controls the advice and customer service functions in a mortgage advisory firm, and who is also involved in a special project:
- Mortgage sales and advice – Responsible for all aspects of mortgage advice and sales apart from mortgages on commercial properties.
- Customer service – Responsible for providing services to existing mortgage customers, including responses to queries and processing alterations to existing mortgages, liaising with providers as necessary. This includes mortgages on commercial properties
- Business upgrade – Responsible for the business change programme ‘Cosmos’; Cosmos is a project up-scaling our Mortgage Unit, ending in August 2020.
Firms meeting the definition of an Enhanced firm also need to have a Responsibilities Map under the requirements of the Regime. These need to contain key information about the firm’s governance bodies, senior management reporting lines and Senior Managers’ responsibilities. Enhanced firms are those meeting any of the following criteria:
- Assets Under Management of £50 billion or more at any time in the last three years
- Total intermediary regulated business revenue of £35 million or more per annum
- Annual regulated revenue generated by consumer credit lending of £100 million or more per annum
- A mortgage lender (other than a bank) with 10,000 or more regulated mortgages outstanding
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