SM&CR – Implementing Lasting Change

We’re now well into the New Year and it’s been over a month since the Senior Managers and Certification Regime (SM&CR) was extended to FCA solo-regulated firms.

In early January, the FCA published a ‘Dear CEO’ letter warning firms against non-financial misconduct in the industry and emphasising that it will take such incidences seriously. In it, ‘appropriate leadership’ is highlighted as a driver for addressing misconduct in financial services. SM&CR involves managers taking responsibility and firms knowing and being able to clearly show who is in charge of what.

Clearly, the changes brought about by the new regime will continue to impact firms throughout 2020.

There are practical considerations, for example. Firms must also ensure that all relevant staff are trained on the Conduct Rules and how these apply to their roles by 9 December 2020. This may seem like a very long way away at the moment, but suitable training schemes will need to be in place ahead of this date.

How then can firms ensure that SM&CR becomes ‘business as usual’ in 2020, and not something they need to be concerned about?

Throughout 2019, we have written about how firms should not view these changes as tick-box exercises, but as opportunities to drive lasting change. So how might this look in reality, and what does change look like in a busy organisation?

Be proactive. Firms should actively seek to understand what their organisational culture is really like, taking into account multiple perspectives and seeking feedback from employees.  Similarly, they should be proactive in ensuring that appropriate training schemes are in place as soon as possible and reviewing existing training and competence procedures.

Firms should demonstrate active listening. Psychological safety in financial services has been highlighted over the past year and the FCA has talked about creating working environments in which individuals feel happy to speak up and raise any concerns they have. However, this will only work if management are willing to listen up in a genuine and meaningful way.

A healthy culture should be one in which employees are willing to voice opinions, ask questions, admit mistakes or bring up concerns, without any fear of the consequences. Ask yourself – does this reflect your organisation? If not, you may have work to do in making sure you’re truly listening to employees – and ensuring they know and can trust in this.

Senior Managers should be role models. They should demonstrate the right behaviours in order to set the tone from the top. The FCA has emphasised that individual Senior Managers have an important part to play in establishing and embedding the right culture and governance within firms, in order to improve standards of conduct at all levels.

Remember that changes may be small to start with and may seem insignificant, but, if implemented correctly, can be long-lasting and are less likely to cause disruption than big changes brought in all at once.

If you require any help regarding SM&CR, please get in touch with your RWA Business Manager or get in contact via the helpdesk -  helpdesk@rwagroup.co.uk.

About the author

Lisa joined RWA in 2014 as an e-Learning Assistant, designing training material for the Aviva Development Zone learning platform.

Her role as Professional Standards Manager involves the creation and review of e-learning content as well as providing proofreading, copywriting and standards support across the business.

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