The Senior Managers Regime represents the first major regulatory change of 2016. The joint FCA and PRA initiative comes into effect for senior bankers on the 7th of March, with plans in place to extend the programme during 2018 to cover brokers, consumer credit firms, insurers, investment firms and asset managers.
Once the Senior Managers Regime comes into effect, a number of senior banking roles (including the Board and the Executive Committee) will require pre-approval from the regulators and organisations will need to have named individuals who have ‘prescribed responsibilities’. Each of these people will need to sign statements of responsibility, describing the exact scope of their accountabilities, and the firm will have to make sure that those documents are up to date to reflect any changes to business model or staff. The end goal is to bring about a situation where there will, for any given governance or compliance area, be a named individual who is responsible for preventing regulatory breaches within that area and who also plays a leading role in their organisation’s risk-profile, strategy, control systems and resources.
On the same date, the Certification Regime will also come in to effect. This means that less senior staff who have roles where they could “pose a risk or significant harm” to customers (staff giving investment advice, for example, or any customer-facing role that requires a financial qualification) will not need to be pre-approved by regulators but they will need to be assessed as “fit and proper” by their firms, on an annual basis. This is a big increase in regulatory responsibility for each organisation and as such will bring with it a need for more internal monitoring and reporting than ever before.
The third and final policy being introduced in March is a new set of Conduct Rules. These set out what the FCA describes as a “basic standard of advice” that everyone covered by the regime will be expected to meet, and firms will have one year to prepare other staff to come under these rules in March 2017. Firms will be required to report any breaches of these rules to the relevant regulatory body within either 7 or 90 days, depending on the type of staff involved.
If you’re unsure of how the Senior Management Regime will affect your business, or feel you need more support in this area to ensure you comply with the regulators then don’t hesitate to get in touch with me via LinkedIn, by e-mailing firstname.lastname@example.org or by calling 0121 643 2100.