You may be aware of the SM&CR – the Senior Managers and Certification Regime. The regime will apply to all solo-regulated firms (i.e. those regulated by only the FCA or PRA) from 9 December this year.
But what are the regulations?
How will they impact conduct and accountability at your firm?
And most importantly for Marketing teams – will they have implications for your financial promotions and marketing activity?
What is the SM&CR?
The Senior Managers and Certification Regime aims to ‘reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence’.
It intends to:
- encourage staff at all levels to take personal responsibility for their actions
- make sure firms and staff clearly understand and can demonstrate who has responsibility for what
In short – it hopes to improve conduct among regulated financial services firms, by making accountability more transparent and more strictly enforced.
The 9 December deadline will bring solo-regulated firms in line with larger dual-regulated businesses such as insurers and banks, which are already subject to the SM&CR.
9 December 2019 is the deadline for training senior managers and certified persons. 9 December 2020 is the deadline for training all other staff.
What do the new rules say?
The new rules set basic standards for good personal conduct. They apply to anyone who is involved in any activity for which the firm is authorised – anyone with the potential to cause harm to customers.
In practice, this can apply to almost any team and activity.
Some of the rules apply only to senior managers; others are relevant to everyone. A specific senior manager will need to be given responsibility for the conduct rules, and they in turn have to ensure that staff are trained and that they abide by the rules.
The rules are set out in the FCA Handbook and will require all employees to:
- act with integrity
- act with due care, skill, and diligence
- be open and co-operative with regulators
- pay due regard to the interests of customers and treat them fairly
- observe proper standards of market conduct
How does this impact Marketing teams?
Because the rules apply to all employees, Marketing teams will have equal responsibility to those in client-facing or Compliance roles.
How can this be applied practically in marketing activity? Some areas have a more obvious relevance than others:
- Paying due regard to the interests of customers and treating them fairly
This fits closely with existing FCA rules – which all Marketers should be aware of – around treating customers fairly. Any financial promotions you produce should be clear, fair and not misleading and suitable for your audience.
- Acting with integrity
There has been a focus on integrity recently, in part in light of recent scandals. It goes without saying that all regulated (and non-regulated) marketing activity should have the needs of the customer at its heart.
- Acting with due care, skill, and diligence
Here, too, there are strong parallels with marketing activity. Ensuring your financial promotions follow the FCA’s rules will give you a head start when it comes to a professional, regulation-focused approach. Make sure you put in place robust processes for FP reviews and approvals so your adverts, publications and other promotions, whether hard copy or digital, meet FCA-imposed standards.
The SM&CR is ‘principles-based’ rather than rules-based. This means there are no hard-and-fast rules to follow. Instead, the regime gives general guidance around the type of culture and accountability your firm should foster.
For Marketing teams, this means familiarising yourself with the rules and their impact on your area of the business. It means ensuring your approach fits the requirements – from a cultural perspective, rather than as a box-ticking exercise.
Make FCA-compliance non-negotiable for your financial promotions
Some regulated Marketing and Compliance teams have found that introducing an element of automation to their financial promotion processes has helped to improve regulatory compliance – as well as improving quality, increasing efficiency and reducing unnecessary admin.
You can read more about how automated marketing workflows can help to improve compliance and improve FP production in our whitepaper, The benefits of automated workflow systems. The paper is free and you can download a 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.