Focusing only on delivery deadlines for FCA regulatory requirements could be a costly strategy

The FCA still haven’t confirmed timelines for SMCR/Accountability 2 for all Financial Services Sector firms (we now know insurers will be at the end of the year) and whilst that remains the case it seems that many firms – that will come in scope – are deferring plans and decisions in terms of their response to it.

As we know the actual dates for Accountability 2 will depend on the Treasury finding space to push the required legislation through and – as we also know – the legislative timetable and indeed HM Treasury are rather busy right now – with all things Brexit!  Add to this the focus of many firms on MiFID II and GDPR (and in the Insurance sector IDD) and it is understandable that there may be slippage in focus on SMCR/Accountability 2.  However, the requirements of all these significant slabs of regulation/legislation share many common requirements and – in particular – T&C implications and obligations.  Given the more urgent deliveries around the first two it is worth exploring what these are.

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The art of self-defence: how to protect yourself from the SMR

The new Senior Managers and Certification Regime is not just intended to encourage high-ranking executives to be responsible for their actions; employees also need to consider how to best protect their own interests.

Not all aspects of the SM&CR have come into force yet, but we now know that in 2018 the regime will be rolled out across the entire financial services sector, affecting up to 46,000 firms.  The profound changes it brings will include prescribed governance structures, recordkeeping, registration and managerial requirements. READ MORE

SM&CR – Accountability 2 – the costs of an “appropriate” response

So the proposed details of the Accountability 2 regime are out there and firms now at least have some answers regarding proportionality and the levels of requirement that will apply to them.  As before the Consultation Papers’ publication – many firms still appear to be focusing on the ‘least case scenario’ i.e. what is the least they can do to get away with it.

This has to be a worrying attitude and one that just doesn’t cut it with the cultural principles changes that the FCA is looking to achieve across the industry.  Instead firms should be focusing on what does good look like and applying the highest practical standards that they can achieve based on budgets and resources available. READ MORE

Getting clear about disclosure

The FCA recently conducted a suitability review of 656 IFAs and intermediary firms. The good news is that overall it found firms were indeed largely providing suitable advice. There were some variations with restricted firms and network members generally doing better than independent directly authorised firms.

It did, however, express general disappointment at the levels of disclosure being provided – with 69 per cent of network members offering acceptable levels while, again, the directly authorised firms performed worse – with only 46 per cent meeting expected standards.

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Creating a culture of compliance for the SMCR

What is culture?  The Oxford English Dictionary defines it as – ‘The philosophy, practices, and attitudes of an institution, business, or other organisation’.

Generally culture is something that develops naturally over long periods of time shaped as it is by so many factors – societal, demographic, political, social economic etc.  It is certainly a very long period of time since the FCA started banging on about culture within financial services institutions – and their expectations in this regard.  The FCA’s message has been as unequivocal as it has been longstanding – that it is looking to hold senior management accountable for the embedding of compliant cultures and high ethical and conduct standards.  To judge by increases in enforcement levels relating to conduct – one could be forgiven for thinking that this has fallen largely on deaf ears.

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Orwellian regime

The cultural change that the Senior Managers and Certification Regime represents should not be underestimated

The Senior Managers and Certification Regime (SMCR) rules apply to individuals working at regulated firms in banks, building societies, credit unions, PRA investment firms and foreign banks with branches operating in the UK.  The rules, which came into force on 7 March 2016, replace the Financial Conduct Authority’s former Approved Persons Regime (APER).

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What would you do if things go wrong and you’re under FCA scrutiny?

What, if anything, would you do if things go wrong and you find yourself being held accountable and under FCA scrutiny? Is there any guarantee that your firm would defend you and / or fund your defence, should it prove necessary? You should have this in writing. FCA investigations typically take 18 months or more plus – legal fees build up rapidly!

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What every SMF should be asking their employer

The Senior Manager & Certification Regime is now over six months old and many senior managers at banks and PRA designated firms are already getting used to their new responsibilities and the realities of increased accountability.

The FCA has published details of the degree to which firms are complying with the new regulatory requirements and it makes for rather poor reading!

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SM&CR regulatory references – further challenges for all

At the end of September the FCA published a policy statement in which it outlined its new ‘regulatory referencing’ requirements.

These new rules will affect firms and individuals already subject to the Senior Managers & Certification Regime from March 2017 onwards.  Firms on which the SM&CR will be imposed in 2018 will also have to comply.

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The very real dangers of the Senior Managers Regime: your survival guide

The new Senior Managers and Certification Regime aims to encourage senior managers at British financial firms to take responsibility for their actions, but its primary function is to hold them accountable for other people’s.

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