The senior managers and certification regime (SM&CR) has been on our radar since the FCA first started talking about it in 2015.
In terms of planning for implementation, we’ve waited until more details became available earlier this year, both from the FCA and from our compliance consultants.
As with all regulation, as a small firm we need to understand which elements apply to our business model.
SM&CR feels like it's intended for much larger businesses, especially banks and insurers, where healthy cultures and corporate governance are more relevant buzzwords.
As directors of a directly authorised and regulated firm, it could be argued we've always been held fully accountable for our conduct and competence.
That said, we fully support any regulatory initiative which has the aim of reducing consumer harm and strengthening market integrity.
Our first step on introducing and embedding the new rules was to establish which category of firm we fall into.
Informed Choice is classed as a core firm, so that means we need to comply with the baseline requirements of SM&CR.
Our implementation of the rules meant considering the conduct rules, the senior managers regime and the certification regime.
Broadly speaking, very little changes for us following the introduction of SM&CR in December.
Our senior managers, who already hold CF1 and some other controlled functions around anti-money laundering and compliance, receive senior management functions, each with a statement of responsibilities attached.
We’ve had to consider which individuals within the firm fall under the certification regime, and establish a process for checking they are fit and proper to perform their roles.
In terms of staff training, in addition to discussing SM&CR in our monthly board meetings, we’ve shared information about the regime on our intranet site for all staff to read.
We’ve also got a team meeting later this month where we'll discuss the rules in more detail.
Reflecting on the rules
Much like Mifid II before it, the goals of SM&CR are admirable. But its implementation may end up doing little to benefit consumers.
Any activity which takes our time and attention away from working with our clients, in order to review regulatory documents and write up new processes, is time as a small business we can ill afford to spend.
We expect SM&CR to have benefits for larger firms, but less so for small firms where the rules seem to replicate or replace existing best practice.
For firms who are still working through their SM&CR planning and preparations, my advice would be to work with a good compliance consultant. (We use Bankhall - other compliance firms are available)
We use their guides to understand the requirements, before adapting their templates to comply with the rules.
Ultimately, cultural change isn’t something that can be imposed on a business by a regulator. It has to be something everyone in the business truly wants to occur.