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.