The Senior Managers Regime – The Future

Senior Managers Regime 2018

Will your business be affected?

The Senior Managers Regime is due to be extended in 2018. After its initial introduction to the senior staff at banks and insurance companies in 2016, the Regime was extended this March and the new conduct rules applied to almost all staff. Next year, asset managers, financial advisers, stock brokers and others will also be affected. As change rolls on, what can we learn from the past year that will help reduce risk and raise management effectiveness?

A crucial lesson for those due to be affected in 2018 is to act fast. There was a degree of last-minute panic as this year’s deadline approached. In an interview given to Financial News on the readiness of the City’s banks, Allen & Overy’s Sarah Henchoz remarked that it was “incredible how many of them are still asking a lot of quite basic questions about what’s required of them”. A sizeable amount of information is required and compiling the individual references is a substantial HR undertaking.

Do you have a system in place?

It is linking the certification process to existing Human Resources systems which banks and insurers have found most challenging. Certification verification and performance management are two different fields, yet this method is preferable – especially as individuals records need to be maintained for six years, despite staff turnover and employees leaving the firm.

The creation of individual records has therefore not been without issue. In a statement this March, the FCA reported that:

“In some cases, we have seen evidence of overlapping or unclear allocation of responsibilities… In other cases, firms appear to be sharing responsibility amongst some staff at different levels of management, obscuring who is genuinely responsible”.

It is not clear whether this obscuring has occurred intentionally or due to the complexity of the task, but the FCA are clear that a culture of individual accountability needs to be established and the lesson for those who will be required to join this culture next year is to be as precise as possible.

Are your people ready?

A crucial feature of the Senior Managers Regime – and the area where People Risk Solutions has provided the most assistance in the past year – has been the adoption of the Conduct Rules. Over the past year, Senior Managers and certified persons have not only had to abide by these rules but ensure that their team was ready to do so as well by the 7th March 2017.

The conduct rules are designed to set a minimum standard of behaviour and ensure that staff always act with integrity. In order to meet these demands, staff have needed to familiarise themselves with the Compliance rules specific to their business and to focus on day to day issues like data sharing and personal share dealing.

If your business or organisation will fall under the Senior Managers Regime in 2018 you need to be putting systems in place, preparing your people and reducing the risk of breaching rules and triggering regulatory sanctions. Using the experience we have gained helping banking and financial firms through this change, PRS offers bespoke workshops and practical HR support that will allow your staff to fully understand the Conduct Rules and experience real life case study scenarios of the Regime in action. To avoid a panic when the deadline nears and to ensure you and your people are fully prepared, contact PRS today.

The Senior Managers Regime in 2018

senior managers regime 2018

A New World

From 2018, the Conduct Rules laid out in the Senior Managers Regime will apply to all financial institutions – we are expecting further details in June 2017. This is an expansion of the current regime for the banks and insurance companies to whom it has previously, and currently, applies. The introduction of a culture of individual responsibility is a significant change and it presents a major challenge to the businesses it will affect.

When the responsibility is placed on people, businesses need to ensure that their people are informed and involved, or they run the risk of breaching rules and triggering disciplinary and regulatory sanctions. For Senior Managers, it is vital that the people they manage get to grips with the new rules by providing practical training and introducing systems and processes to help manage the process.

Providing a Guide

As the SMR was introduced throughout the banking and insurance industries, People Risk Solutions has run workshops on Culture, Values and Regulation designed to integrate the new regime into affected businesses and organisations. These interactive and case study driven sessions are now adapted and open to any business whose people will require familiarity with the conduct rules.

At the heart of the new culture are the core 5 rules themselves, which are as follows:

• Rule 1: You must act with integrity
• Rule 2: You must act with due skill, care and diligence
• Rule 3: You must be open and cooperative with the FCA, the PRA and other regulators
• Rule 4: You must pay due regard to the interests of customers and treat them fairly
• Rule 5: You must observe proper standards of market conduct

In order to fully understand the rules and the manner in which they are to be applied to everyday work, our workshops provide an overview, not just explaining what the accountability regime is, but why this is happening and what the intended purpose is. We then use a series of scenarios to bring the rules to life for everyday work.
From a broad examination of the regime, participants are then able to identify the key features of the required culture and, crucially, how these differ from the past.

Bespoke Direction

Rules are a framework designed to be rigid and intransigent. However, the businesses and organisations they are to be adopted by will be varied, with subtle and important operational differences. This is why each workshop addresses how the new regime will work at your organisation – working with Senior Managers to create a compliant system which will uphold the values and purpose of the rules within a familiar framework.

To test these systems and ensure that participants are able to apply the rules in the real situations they will be facing, a series of scenarios has been developed – each drawn from real-life case studies. The ultimate aim is for delegates to use the understanding and experience of the session to create personalised action plans they can immediately implement when they return to their work.
The FCA has stated that their extended regime will be ‘clear, simple and proportionate’. The complexity comes with the integration of these clear rules into complex organisations. Using our experience gained providing assistance to the banking and insurance industries during 2016 and 2017, People Risk Solutions will be on hand to provide the training and HR support your business requires.

To find out more, contact us

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