This week, New Model Adviser took to the streets of the City to find out how much people really know about the Senior Managers & Certification Regime.
The resulting video shows the response they got – a mixed bag in terms of awareness of the new regime and its implications. It’s worth five minutes – and while it doesn’t give a true picture of how aware the City is of the SMCR, it does highlight some interesting points:
- Most people interviewed weren’t aware of what the regime means…
- …Although not all of those interviewed looked like City workers – one man had been for an interview, with others dressed as if they were taking part in some sort of charity fundraising
- Even those who didn’t know what it was thought that the regime sounded like ‘a good thing’
What is the SMCR?
On 9 December 2019, the Senior Managers and Certification Regime was extended to cover all solo-regulated firms (i.e. those regulated only by the Financial Conduct Authority). It now covers 47,000 firms.
The final rules on the extension of the regime were published by the FCA last summer. At the time, we published a blog, SMCR is coming to solo-regulated firms; what do you need to know?
When announcing the extension, the FCA said that it was ‘a key step to creating a culture across financial services where individuals step forward and take accountability for their own actions and competence.’
What does it aim to achieve?
As at least one person in the video correctly identified, the SMCR aims to encourage greater individual accountability and improve personal conduct in financial services.
It hopes to do this by:
- Ensuring senior managers are accountable for conduct in their areas of responsibility
- Ensuring a minimum standard of behaviour for everybody working in the sector through 5 Conduct Rules
- Enhancing professionalism in the industry by requiring firms to certify that their staff are fit and proper
On the day the extension came into force, Jonathan Davidson of the FCA said that culture and governance ‘is a priority for us and should be for industry too’.
How you can comply with the SMCR
By now, all affected firms should be complying with the regulation. This means that you should have:
- Trained all relevant staff on the Conduct Rules and how they apply to their roles
- Ensured that all staff in certified roles are fit and proper to perform that role and have been issued with a certificate
- Submitted data to the FCA for its directory of key people working in financial services
Jonathan Davidson stressed that SMCR compliance isn’t just about ‘ticking the box on implementation’ but that firms need to ‘live the spirit of the regime’.
How can you do this?
- Make sure you have created a culture within your firm that encourages and facilitates good behaviours. Embedding a compliant ethos across your operations isn’t always easy – our blog on the 5 key steps towards a compliant culture might prove a useful read
- Make everyone aware of their role in ensuring compliance. Increased accountability makes it more imperative than ever that compliance is everyone’s responsibility
- Stay up to date with the regulator’s priorities and any upcoming new regulations. With the SMCR identified as one of the FCA’s priority areas for 2020, and cultures of compliance and accountability also on their radar, any new rules are likely to support and enhance these aims
- Familiarise yourself, if you need to, with the FCA’s SM&CR Guide for solo-regulated firms and finalised guidance – they’re both good refreshers on what you should now be doing
Keep pace with the evolving challenges you face
The SMCR is a great example of the ever-changing and expanding regulatory landscape. As a Compliance professional, keeping track of the various rules and regulations governing your industry, not to mention endless guidance and best practice, can be a challenge.
Our whitepaper, The changing role of the Compliance Manager, explores the changes your role is undergoing and the ways you can tackle your challenges. You can download a free copy from our resource library.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.