FCA publishes SMCR stocktake report

FCA has published the findings of its review on how the SMCR has been embedded in the banking sector. It hopes banks and solo-regulated firms will find the conclusions of use and interest, although it notes the review is not a full post-implementation review and FCA is not proposing to make any policy changes as a result of it.

The review involved 45 individuals in 15 banks and individuals within trade associations, the BSB and regulators, and covered a wide range of issues including accountability, certification, regulated references, culture and unintended consequences.

The findings were generally positive, as firms move away from rules-based compliance in favour of embedding the regime within their organisations.  FCA also found:

  • concerns, mainly from NEDs, that too much was being asked of them, and that as a result the line between executive and non-executive directors was becoming blurred;
  • some firms were using the management responsibilities map for more than what it was intended for, and firms were worried about making their own assessments of what “good” looks like;
  • while firms have in place processes to oversee the certification population they were not so good at assessing the effectiveness of their approach;
  • firms were generally positive about the regulatory references requirements, but commented that timeliness and quality of references could still be improved;
  •  staff generally understand the Conduct Rules, but some firms do not tailor their rules to the particular staff roles – and many firms could not explain what a conduct breach looked like in the context of their business;
  • firms believe SMCR has created a stronger tone and ownership from the top, but find it hard to appropriately measure culture;
  • there were few unexpected consequences, but some firms mentioned challenges in recruiting staff from outside the sector, and the need for more staff and work to administer the regime.

Emma Radmore