Friday Highlight  

Clock is ticking on SMCR compliance

Senior managers and certified persons must also undergo annual, or sometimes even more frequent assessments, to demonstrate their fitness and propriety, including competency and financial soundness.

Firms must retain evidence demonstrating competence under fitness and propriety, of knowledge and skills through testing, file reviews, skills assessments, line manager reviews, ongoing CPD, and so on.

Implementation of the new regime will be a lengthy process, taking months to complete and requiring a dedicated team to work out its requirements.

Here are the key steps that firms will need to take ahead of the implementation deadline:

  • Determine its classification and understand how SMCR applies to them;
  • Identify senior managers, allocate the appropriate responsibilities and produce 'statements of responsibilities';
  • Identify certified staff, ensuring that mechanisms are in place to train, assess and certify them as competent, as fit and proper;
  • Train senior managers and certification staff on the new conduct rules;
  • Review 'statements of responsibilities' and terms of reference of governance and committees;
  • Store the evidence, and be able to produce the evidence, demonstrating competence under fitness and propriety, of knowledge and skills through testing, file reviews, skills assessments and ongoing CPD, and so on.

Caution

Some firms may have decided to adopt manual processes to comply with the regime.

While it may be possible to use spreadsheets to administer SMCR, the process would quickly descend into a tick-box exercise, thus defeating the purpose of the initiative.

Not impossible, but certainly a risky approach when one has to consider annual deadlines, keeping information up to date and ensuring information remains consistent across numerous documents.

By adopting the appropriate technologies, firms could reduce the administrative burden and make time for the more complex and strategic parts of SMCR, like training and competence, and the duties of responsibility and accountability.

Still to come

On top of all that, when the FCA’s Directory opens for submissions, firms will be required to submit the details of their senior managers, certified individuals, as well as other important individuals who undertake business with clients and require a qualification to do so.

Firms must also ensure that the details remain up-to-date.

Banking firms and insurers can start submitting data as of September 2019, while all other firms can start submitting from December 9 2019.

The Directory is a new public register that enables consumers, firms and other stakeholders to find information on key individuals working in financial services.

Start now

Firms must start preparing now, if they have not done so already, to effectively tackle the plethora of changes that are being introduced by the new regime.

Whether a firm decides to build their own solution, or engage consultants to assist with their SMCR readiness programme, it will require many lengthy discussions along the way.

Therefore, my advice is to push through the inertia because, “a journey of a thousand SMCR miles begins with a single step”.

Sean Lam is chief executive of Walker Crips