Regulation  

Senior managers regime tops list of CEO concerns

Senior managers regime tops list of CEO concerns

With less than 100 days left, the preparation for the senior managers and certification regime is a key focus for the majority of chief executives.

The latest Pimfa CEO Sentiment Survey revealed SM&CR was among the top three regulatory concerns for 40 per cent of chief executives, alongside Mifid II and issues with the Financial Ombudsman Service.

Gary Sunderland, head of research and indices at Pimfa, said: “Regulations, and their implementation and compliance, came up as the top issue for CEOs, as it did last year. Firms are concerned about the amount of time required to manage regulation.

“As regulation changes with Mifid & SM&CR, compliance is no longer just the responsibility of those who work in the compliance department, everyone within the firm now has a role to play in ensuring that the firm remains compliant with the current regulations.”

The regime was initially introduced for banks and other dual regulated firms in 2016, before it went live for insurers in December 2018. The Financial Conduct Authority is now extending it to the rest of the firms it regulates with a December 9, 2019 deadline.  

Andrew Shrimpton, executive chairman of compliance consulting at IQ-EQ, said geographic jurisdiction wasn't a defence for businesses that fall foul of the rules.

He said: “The rules of responsibility will apply equally to foreign-domiciled compliance managers with a UK office, team and infrastructure, as they do to firms founded and solely based in Britain.

“If the London office makes a mistake, they can still be held accountable, fined or worse, even if they're based in New York, Boston or San Francisco.”

Mr Shrimpton explained that a number of businesses with senior managers in other countries often manage things remotely and they must question whether they are comfortable being responsible for the UK office compliance.

Carl Wallis, head of group compliance at Bankhall, agreed, adding that the implementation of SM&CR must go beyond a simple compliance exercise.

He added: “The SM&CR aims to increase individual accountability and ensure it is easy to establish exactly who is responsible for what within firms.

“One of the key things we would stress is that implementation should be much more than a compliance exercise; treating it as such largely misses the point of the regime, which is about ownership, accountability and the culture that exists across all senior managers within each firm.”