We’re nearly there: extended SMCR implementation day, 9 December 2019. Of course, it’s much more than a day; it’s a culture, as the FCA are so keen on telling us.
Before the deadline
In the run-up to implementation, I’ve been visiting a number of clients to train their Senior Managers and certification staff on SMCR compliance. Coupled with my work for the banks already caught under the regime, here’s what I’ve learnt about being ready for the big switch:
- Firms are taking conduct rules training seriously. I’ve delivered bespoke sessions in town hall sessions and 1 to 1 sessions. And a good job, given the FCA highlighted in its stocktake earlier this year that conduct rules below Senior Manager level is an important enforcement point for them;
- Employees, too, are taking conduct rules seriously. However much you tell the certification population and conduct rules staff that your aim is not to terrify them they do, often, look terrified - even once they work out that there isn’t much of a shift from the principles of the approved persons regime;
- The intrigue into what non-financial misconduct truly constitutes a breach of the requirement to act with integrity rages on, as does the interest in how the conduct rules play into the FCA's fixation with speak up culture;
- Senior Managers are generally very engaged in the preparation of their statements of responsibility and the key practical issues that can arise as they demonstrate the requisite level of oversight in their roles;
- Identification of certified persons and their respective roles and reporting lines remain under review. Although firms are mostly compliant with their obligations to identify certified persons, for some organisations there have been complex decisions, which will no doubt be kept under review and re-evaluated annually.
After the deadline
Of course, not everything needs to be perfect now, and some things can be held over for Q1/Q2 2020:
- Organisations will be firming up the appropriate internal process for dealing with tricky conduct rule issues and F&P decisions. Firms are keen to establish processes that are the right fit for their organisations - all keen to be ‘clean’ but also proportionate to their leaner organisations. The amount of machinery needed will depend on the culture, risk profile, organisation size and the actual number of cases;
- Supporting certifying managers will be top of the list for many firms, as they work with them to roll out guidance for conducted revised appraisal processes that tie in to certification, so they can be ready for that first certification by 9 December 2020;
- HR teams will continue to ensure that their onboarding processes align with F&P checks - and, of course, that their regulatory reference, notification and disciplinary processes are joined up to ensure regulatory and employment law compliance;
- Process points aside, many firms are also seeing SMCR as a time to consider clean culture and any need for overhaul of, for example, their speak up approach.
Welcome SMCR break
Project teams will be delighted to get to 9 December 2019 - and hopefully the Christmas period will provide a welcome break after the long onslaught of mapping tables, regulatory job profiles and form-filling. One firm I visited even had an SMCR chocolate cake laid out in celebration/ commiseration. However, such is SMCR, firms can’t relax for long: it is the start, not end, of an era.
Please note this blog post was written by a Clifford Chance LLP employee. Clifford Chance LLP is the parent company of Clifford Chance Applied Solutions (CCAS). The content within this post does not constitute legal advice.
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