2015 has been another year of expansion and change for regulations effecting Financial Institutions of all sizes. Gone are the days where a one size fits all approach to risk could be maintained for an organisation to be seen as compliant – it is no longer something that can be handled by the Finance Director or CEO. There is now a definite need for a specialist risk person to interpret regulations and implement them in to the business and then maintain that implementation going forward. For smaller organisations especially, new regulations will need to be carefully deciphered by a committed expert who fully understands how they will work in relation to an organisation’s size and market position.
The FCA have continued to tighten a wide range of regulations, and their call for every regulated financial organisation to have a dedicated individual responsible for risk has come seemingly at the exact same time as Solvency II, which represents one of the biggest ever regulatory changes affecting Financial Mutuals.
Solvency II Pillar 2 introduced the Senior Insurance Managers Regime which is about managing risk and capital and required organisations to have one person in place managing both. Solvency II Pillar 3 says that to be compliant a company needs to have Pillar 2 thoroughly embedded in the business already and have key function holders managing each aspect risk management, compliance, internal audit, and actuarial.
For a small firm who perhaps only employ 30 people, it’s now a matter of identifying whether they need an individual per function to hold responsibility or one individual who can hold responsibility over all of these areas and furthermore whether that individual needs to be a direct employee or if they can buy these services as an outsourced product. With 120 days to go (at time of writing) until Solvency II Pillar 3 comes into effect, there are a number of solutions and still time to implement the one that’s right for your business.