With the FCA’s Senior Managers and Certification Regime (SM&CR) scheduled to be rolled out to advisers at the end of this year, bankers have shared their knowledge on what to look out for.
The SW&CR seeks to increase individual accountability within financial services and is considered to be a significant step towards improving culture and governance among regulated financial firms.
The regime was initially rolled out to the banking sector in 2016, and further adopted by insurers in 2018.
With advisers joining later this year the FCA anticipates the regime will reach 47,000 solo-regulated firms by December 2019.
Once introduced, it requires all senior managers to be FCA-approved and appear on the FCA register and certification for all staff whose jobs significantly impact customers with regular reviews.
In addition, staff must adhere to five conduct rules including, integrity, due care and diligence, fair treatment of customers, proper standards of market conduct and remain open and co-operative with the FCA and Prudential Regulatory Authority.
Speaking about the regime’s introduction at Virgin Money in a video published by the FCA yesterday (February 7), former chief executive Dame Jayne-Anne Gadhia, said: "It's really important to understand the essence of the senior managers regime, which isn't trying to trip us up, it isn't trying to end up with everyone in prison - it’s actually to make sure that everybody does understand what’s asked of them, does understand the job that they’re supposed to do and can deliver on it to the best of their ability."
Vis Raghavan, CEO of EMEA at JP Morgan, added: "The one key piece [of advice] which I would absolutely leave with somebody else who is adopting it is - this has got to be owned and led by the business, so you cannot delegate it to HR or compliance or any other kind of function."
Liz Nolan, chief executive officer of EMEA, State Street, agreed with this advice.
She said: "You have to ensure that it’s a business initiative. It’s not a compliance initiative. It’s one of the things that we felt resolutely through this.
"Compliance as a second line function are there to help and to guide but the business has to own and embrace it. The business has to be the one that really is understanding and driving how to implement and that’s how you’ll embed
Jon Symonds, deputy group chairman at HSBC, said: "Prior to the Senior Managers Regime, we were constantly asking questions of 'So who’s accountable? How is this project going to get delivered, by when and by whom? And who are the teams?'
"And so the Senior Managers Regime came into an environment where actually we were looking for more clarity and, to
be honest, the stimulus it gave us in its implementation was exactly what we needed."
But Martin Bamford, chartered financial planner at Informed Choice, said he was concerned the regime had a "disproportionate scope for smaller IFA firms".