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Preparing for the Senior Managers’ Regime – Marketwatch

  • 08/02/2017
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The FCA is due to extend its Senior Managers’ and Certification Regime to all financial services firms from 2018. Its scope includes incentives, remuneration and the steps firms take to address associated risks.

This week we’ve asked out panel of experts to discuss what changes they have already put in place to prepare for the next phase of the regime.

Antony Lark, managing director, Just Mortgages, says it is already ahead in making most of the changes needed and has already thoroughly addressed areas such as incentives and internal auditing.

Terry McCutcheon, CEO, Finance Planning Group, believes that the standards set out under the regime, responsibility, accountability and governance, are not just a matter of good practice but an essential part of running a business.

Jane Benjamin, head of relationship management at PMS, says the mortgage club has been keeping members updated through seminar and events programmes to ensure they are prepared when the new regime comes into force.


Antony LarkAntony Lark is managing director of Just Mortgages

Just Mortgages has implemented most of the changes already and did so three years ago when the regime started being discussed. Since April we have also worked with our network Openwork to confirm that we have done everything that is required. As a result we believe that we have some of the best quality metrics in the industry already in place.

While our brokers continue to earn bonuses, 25% of this is about quality and incentivising the right behaviours. To do that we look at four areas: policy cancellations, file quality, upheld complaints and customer satisfaction surveys. The survey is carried out by an independent telephone team to ask the client about their experience, whether they understand what products they have taken out and why and whether they would recommend us.

In the last year we have implemented an internal audit function reporting to our head of compliance. The internal auditors not only look at files and other desk based reviews, they also go out into the field and look at how our brokers interact with their clients and the way that they provide advice. In addition, our sales managers are also in the field looking at the quality of what our advisers are providing.

To ensure the whole company is fully behind the right customer outcomes, it is not only brokers who are incentivised to achieve positive outcomes; managers and directors also have 25% of their bonuses dependent on quality. So a sales manager has an incentive to make sure that all the advisers in their area are behaving in the right way and achieving the right outcomes for the customer.

Finally, we scaled back our reward events so they are closer to home, and only reward advisers who have the very best record of quality and positive consumer outcomes.

In this way we feel we have the right balance between incentivising and rewarding advisers for doing a good job, and fostering the right attitudes towards the customer.


Terry McCutcheon newTerry McCutcheon is CEO, Finance Planning Group

Although the Senior Managers’ and Certification Regime, the replacement of the Approved Persons Regime (APER), is not being extended to Intermediary Firms until 2018, at the Finance Planning Group we have already taken a number of steps to ensure that our culture and current processes are aligned to what we expect to see from the Financial Conduct Authority next year.

Indeed, having specifically asked the regulator about the Senior Managers’ and Certification Regime roll out, we have been advised by the FCA that they will be offering firms further guidance nearer the time.

Having looked at the content so far, our understanding is that the principles of the new regime will be based upon responsibility, accountability and governance. At the Finance Planning Group we are continually incorporating these principles into our culture, as we see this as not only good practice, but an essential part in the running of a modern and compliant financial services business. As an example, we have already reviewed our ‘on-boarding’ processes to make certain that they are sufficiently rigorous to not only ensure that we have the right candidates, but also to make sure that anyone new to the industry is aware of the potential personal responsibilities that this new scheme may place on the more senior of individuals joining a financial services business.

In terms of our timeline for the Senior Managers’ and Certification Regime, we are also reviewing our management structure, including our reporting lines, accountabilities and job descriptions, which we hope to be able to complete during this year. As soon as the FCA has published further clarity and guidance on the specifics required by an intermediary firm, we should be in a position to implement the Regime well within the FCA deadline when it goes live in 2018.


headshot of Jane Benjamin The Right Mortgage and Protection NetworkJane Benjamin is head of relationship management at PMS

The Senior Managers’ Regime has so far focused on the banking sector, with the intention to extend the regime to the entire financial services industry in 2018. It is therefore no surprise that it has become a hot topic in our conversations with lenders.

Within the directly authorised adviser community there are a huge variety of firms, which is why the final details and requirements are so important so that we can gauge the full impact. While it is likely that larger firms will be particularly affected, these forthcoming changes will be of significant interest to all authorised firms.

Some firms might see this as just another regulatory burden, but in essence these changes simply form part of the regulatory direction of travel which we already know about. The regulator is focused on embedding a culture of greater personal responsibility and accountability throughout the financial services industry.

In that sense DA firms should have nothing to fear. They are already focused on delivering quality outcomes for their customers – it is part of their DNA.

While we await the final details of how the regime will extend to all firms in 2018, we have been keeping DA firms updated in regulatory bulletins and it also forms part of our events and workshops programme. Through these and other sessions we are encouraging firms to prepare for and mitigate the impact of these changes by reviewing and strengthening their systems and controls. This is good business practice and enables firms to spot emerging issues and trends early. It will also help to ensure that firms are in good shape to deal with the changes and challenges ahead.

Mortgage clubs will continue to have an important role in this, particularly those with close associations to specialist compliance services providers, offering valuable regulatory guidance to help ensure all FCA requirements are satisfied and good customer outcomes are delivered.

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