The SM&CR is a regulatory change enforced by the Financial Conduct Authority (FCA) with the aim to make individuals more accountable for the actions of themselves and their employees.
Replacing the Approved Persons Regime, SM&CR will apply to firms that are only regulated by the FCA, so advisers that are part of networks will not be directly affected.
With the SM&CR set to be effective from 9 December, Mortgage Solutions asked brokers how they were preparing for the regulatory update.
Right on track
Many of the broker firms said they are still in the process of readying themselves for SM&CR but are confident that they are on track to meet the deadline.
Des Tourick, director of 1st Call 4 Mortgages, says the preparation for the changes have not had a big impact on the company yet and assures it will all be done before the deadline.
He said: “We think it’s been quite easy to follow. We’re getting through and we’re taking on compliance support services to ensure we fully understand the requirements. We will get there – we will not fail to comply.”
It is a similar story for Sophie Bowe, business development manager at Beacon Mortgages, who said: “We are not fully prepared for SM&CR yet, however plans are underway.”
Beacon Mortgages has also relied on external assistance, as Bowe adds: “We’ve taken a lot of advice and support from Simply Biz and we imagine we will continue to need even more support going forward.”
Bowe said the firm had not struggled too much with the preparation, noting it had not “been either easy or difficult”.
“We do fully understand what is required and are confident that the regime will not have a huge impact on our firm as we already have systems and controls in place which can be adapted accordingly,” she adds.
“I think if you’ve been running your business in a compliant way up to now it’s not going to be a massive change for anyone.”
Better for the industry
Nick Sherratt, managing director and co-founder of Mojo Mortgages, says that while the company has “always encouraged a culture of responsibility and integrity at all levels” having a formal structure to adhere to will help ensure a “consistency of standards across financial services”.
He adds: “This personal responsibility for conduct will undoubtedly improve the culture of companies within our industry, resulting in better customer experiences and outcomes.”
Only for the few
While some are getting on with the changes, others believe it does not really apply across the board.
Tony Silver, founder of White House Mortgages, says the update “totally ignores the majority of mortgage brokers” who happen to work independently or within small businesses, arguing it only makes sense if “you’ve got a whole load of employees”.
As a result, he made the decision to not allow himself to suffer the consequences of others by getting rid of the staff he once had.
“The reason I don’t have employees is the business owner is responsible for absolutely everything an employee says or does, even when you have no idea what they say or do half the time,” Silver says.
“I’ve gone even further – I just don’t have employees anymore.
“I downscaled as a result of always being held to account with 20/20 hindsight vision. I’m simply not prepared to take the risk of what an employee says on behalf of my company.
“It’s just me and I’m responsible for everything that happens,” he concludes.
