FIN.

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.
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Emma Radmore