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Industry accountability and the Senior Managers Regime – SBG

by: Stephen Gazard, managing director at Sesame Bankhall Group
  • 07/03/2016
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Industry accountability and the Senior Managers Regime – SBG
The Senior Managers and Certification Regime comes into force today for the banking sector, Stephen Gazard, managing director at Sesame Bankhall Group, looks at the march of increased accountability across the industry.

It will apply to banks, building societies, credit unions and PRA-regulated investment firms replacing the existing Approved Persons Regime for deposit takers and investment banks. It places individual responsibility on key managers for conduct within their firm.

While these policy changes are focused on senior management within the banking sector, it is likely that this will be the direction of travel across the wider industry as part of the regulator’s drive to embed a culture of greater personal responsibility throughout the financial services industry.

Greater personal responsibility and accountability on individuals holding controlling functions is a trend that Bankhall has been highlighting for several years by urging adviser firms to take preventative action by reviewing and strengthening their systems and controls. Indeed, the Bankhall team has dealt with a steady increase in requests for support in this area.

The Senior Managers and Certification Regime (SM&CR) within the banking sector is encouraging greater accountability beyond those individuals holding controlling functions to include senior managers and their teams, with an annual certification process being introduced for staff below senior management level.

Individuals in the banking sector who conduct a senior manager role could potentially face investigation and questioning from the FCA as to why any failures within their remit occurred and, as a result, be held personally accountable.

While the regime does not impact on our profession at the moment the trend is there for all to see. Initially the SM&CR regime only affects the banking sector, but the government confirmed in October 2015 that it intends to extend the regime to the entire financial services industry during 2018. It will replace the Approved Persons Regime so these changes will be of significant interest to all authorised firms.

The hope is that this continuing trend of greater personal responsibility and accountability will ensure organisations drive through continuous improvements in their firm’s systems and controls framework. This will reduce the risk of breaches and drive up standards not only within their business, but also across the industry as a whole.

Continually reviewing systems and controls is good business practice. It enables firms to spot issues early and take account of emerging trends – all good reasons why it should remain high on every adviser firm’s agenda.

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