The regime’s focus on the overall accountability of senior managers has also had an impact on internal decision-making, which while mostly positive, can at times lead to the siloing of decisions as senior managers ask, ‘Why should this decision be taken collectively any more, if the buck ultimately stops with me?’
Overall, however, SMCR is driving positive change as a preventative measure.
Firms have (and will be) forced to review their governance, responsibilities and structures to ensure that responsibilities and functions are clear; that certification staff are (and remain) fit and proper, and importantly safe, to perform their roles; and that staff behave appropriately at work, all in an environment that is free from misconduct and in which constructive challenge is encouraged.
Within firms, compliance, human resources and legal functions are working ever more closely together and with management to ensure that information is shared appropriately and that risks are assessed in line with the regime’s requirements and for the good of the firm, its customers and the market.
The success of SMCR will ultimately be defined, however, not by the degree to which it is implemented in the short-term, but in years to come when we look back and assess the extent to which it has driven positive cultural change and a long-term improvement in conduct and performance where it is needed.
Louise Skinner is a partner at global law firm Morgan Lewis