RegulationDec 9 2019

Six advisers on how they prepared for SMCR

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Six advisers on how they prepared for SMCR

The Senior Managers and Certification Regime came into force today; a bid from the City-watchdog to establish positive cultures and effective governance across the advice market.

The regulator recently said it hoped the implementation of the new regime — which has already rolled out to banks and insurance companies and now covers 48,721 regulated firms - would foster a more “adult-like” relationship with advisers.

Under the rules, there will be greater individual accountability for senior managers should something go wrong, as well as a new standard for personal conduct.

Over the past year there have been contradictory tales of how much the new regulation will affect advisers, with some warning IFAs they were “wildly underestimating” the changes while others urged advice firms “not to worry”.

Here is how six advisers have prepared for the Financial Conduct Authority’s latest market-wide regulation.

Ricky Chan, director of IFS Wealth and Pensions | 3 advisers, 1 office manager

Mr Chan said a big part of his firm’s preparation for today was to issue certificates and documents which show who is responsible for which roles and actions within the firm.

He said: “A lot of it is just ticking the boxes and documenting what we already did. There are forms, certification of staff, senior managers and staff ‘fit and proper’ declarations.

“Previously there was a bit more overlap in responsibility but now it’s a bit more defined, so they may be more cautious about it.”

Mr Chan also said there would be more ongoing training for all staff in the firm, mainly for back office staff who now have greater knowledge about the process and the responsibilities in the firm.

IFS Wealth & Pensions compiled a 22-box checklist of actions needed to be completed in order to be SMCR-ready.

These included producing a statement of responsibilities for each individual holding a senior manager function, assessing whether staff were fit and proper for their role, and training all employees on the regulator's conduct rules.

Paul Stocks, director at Dobson & Hodge | 2 advisers, 2 financial services staff, 16 involved with insurance broking arm

Mr Stocks said the most time consuming part of the SMCR process was “getting [the firm’s directors’] heads around” all the new requirements to ensure they had all the correct evidence to back everything up.

He said: “One really experienced member of our team even became ‘head of SMCR’ and was tasked with finding out how it affected us, as we couldn’t all take time to do so.

“But that meant someone who was really good and experienced was not in front of clients.”

The firm also went through a number of different CPD courses to evidence the directors understood the new regulation.

After this Dobson & Hodge compiled ‘SMCR files’ for all its senior managers — which included everything from DBS checks to financial planning certificates to credit records — and formalised different responsibilities within the firm.

Other actions included training courses from its compliance partner and filling out fitness and propriety forms.

Jason Hollands, director of communications at Tilney | 230 advisers, 120 investment managers, 850 staff

Mr Hollands said Tilney had made a number of changes in the lead up to SMCR, including a shake up of the boards of directors of some of the operational companies within the Tilney Group.

He said: "We've looked at who the directors are on various boards and changed some around to align with the regulation."

Mr Hollands said the group had also run extensive internal training among all levels of staff specifically about SMCR.

Martin Bamford, head of client education at Informed Choice | 6 advisers, 8 staff

Mr Bamford said: “SMCR has been on our radar for most of the year, the subject of discussion in board meetings and with our wider team. 

“For us, it’s mostly been a case of documenting our existing roles and responsibilities. We’ve also briefed the team on what the new rules mean for them.”

Mr Bamford said a key part of SMCR — demonstrating fit and proper status — was already something the business went through as part of its annual training but that the firm had used guides and templates from its compliance consultants to pinpoint SMCR.

He added: “New firms who are now approaching this subject should source help from experts, instead of trying to reinvent the wheel, interpreting the FCA rulebook for themselves.”

Joanna Leyden, director at Monument Financial | 3 advisers

Ms Leyden said SMCR had not particularly affected Monument Financial as the firm had only become directly authorised last March.

She said: “We had to present all this to the FCA when we wanted to become authorised so it's all really up to date.

“Also if you’ve got anything decent about you then you’re doing all this stuff already. One of the only things we’ve done is a flowchart of our responsibilities and client journeys.”

Ms Leyden thought it was a good thing the regulation was “serving as a reminder” of good practice to the advice market.

Sarah Drakard, IFA at Cruze Financial Services | solo appointed representative

As an appointed representative Ms Drakard is not responsible for her compliance as her directly authorised firm, New Leaf Distribution, handles all the regulatory side of her business.

But Ms Drakard said the network had hosted a webinar on SMCR and issued a test to ensure its ARs knew about the regulation.

She added: “I do not have time to think about all this stuff so they’re responsible for my compliance.”

imogen.tew@ft.com

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