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Senior managers regime is 'cultural shift' for advisers


The senior managers and certification regime will allow the Financial Conduct Authority to hold individuals accountable for mass misselling scandals, Mark Spiers has said.

The partner at regulatory consultancy Bovill said this would represent a "cultural shift" for financial advisers.

He said: "This is very much looking at changing a perceived problem with culture. We have had misselling scandals over the past few years so if there is misselling in your adviser population the regulator will then say 'OK, what are your systems and controls around product governance and who is responsible for that?' and it will be an individual who will then be carrying the can for that misselling, so that will be a cultural shift."

The regime will come into effect for financial advisers in December and advisers face different demands depending on whether the FCA classifies their company as "core", "enhanced" or "limited scope".

Mr Spiers said most advice companies would fall into the core category, meaning they will only have to comply with the baseline requirements.

But he said the certification element of the regime, which will see advice companies having to certify their employees rather than have them approved by the FCA, would have a greater effect on "business as usual" than the senior managers regime.

He said: "Currently most of our adviser clients have CF30s, so their advisers are CF30 approved persons, and all of those people then will become certified individuals however there is a sting in the tale.

"Even if you are a core firm in the senior managers regime you will still have to think about who else in your organisation should be a certified individual.

"It is not just the advisers, it is also heads of large business units and that could be the head of financial planning for instance, as compared to the head of the investment business, or it could be the head of [human resources] or the [chief operating officer].

"That's actually where a lot of work is going to be done. It is thinking about what that pool of people is and who you are going to certify.

"And then of course the really hard work comes, which is deciding how you are actually going to certify people and how you are going to run your business in the future."