In Focus Collections
Senior managers’ regime: extension and preparation
Are you ready for the new rules in terms of your policies and company culture?
Jonathan Davidson Executive director of supervision – retail and authorisations, the Financial Conduct Authority
The Financial Conduct Authority (FCA) last month issued a reminder to FSMA- authorised firms that they need to start preparing , to be ready for the new regime coming into effect on 9 December 2019. We have already rolled out the SM&CR
to banks and insurance firms, and we are extending the regime to the 47,000 firms we regulates.
Aims The aim of the SM&CR is to establish healthy cultures and effective governance in firms by encouraging greater individual accountability and establishing a new standard of personal conduct. Senior managers will need to take
responsibility not just for the decisions they make, but for how they influence others, encouraging a healthy culture from the top. Under the regime, all senior managers
must have a statement of responsibility (SoR), which should be clear enough for everyone to understand what activities the senior manager is responsible and accountable for in the business. Larger and more complicated firms must
have Responsibility Maps, showing how the responsibilities of their senior managers fit together. Firms are urged to prepare SoRs and Responsibility Maps as early as possible. We published guidance in March to give
firms practical assistance and information on preparing SoRs and Responsibility Maps.
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Culture With the introduction of the SM&CR, we are seeking to encourage a culture where all financial services staff embrace the new five conduct rules: l Act with integrity. l Act with due care, skill and diligence. l Be open and cooperative with the FCA. l Pay due regard to the interests of customers and treat them fairly. l Observe proper standards of market conduct. Firms should start by preparing their
bespoke training plans and ensure that staff understand the practical application of the specific rules which are relevant to their roles. For bespoke training, firms can look to the FCA handbook. The culture and governance of firms is an ongoing priority for the FCA and the
extension of the SM&CR is one element of this.
Conclusion Senior leaders should view the regime as a catalyst to inspire positive culture change at their firms. The SM&CR is an important way to
ensure that individuals at all levels within firms take personal responsibility for their actions. It is good for business when employees
buy into a firm’s purpose, feel personal accountability and are inspired to speak up (and to listen). This can be encouraged through the new conduct rules. This kind of culture supports a healthy
and inclusive workplace for employees, innovation and sustainability, and thoughtful identification and mitigation of risk. CCR
Under the regime, all senior managers must have a Statement of Responsibility (SoR), which should be clear enough for everyone to understand what activities the senior manager is responsible and accountable for in the business
May 2019
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