Delegation and the Conduct Rules

The role of a Senior Manager is a challenging one and carries with it many responsibilities and accountabilities. Being a Senior Manager is far more than just having an impressive job title and status. Unsurprisingly, it requires effective management skills. Effective delegation skills, in particular, are crucial for Senior Managers working within the financial services sector. Failure to delegate effectively can, in some instances, lead to regulatory breaches.

The FCA’s Conduct Rules, which have applied to general insurance intermediaries since December 2019, include the requirements that Senior Managers must:

  • take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively [SC1]; and
  • take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively [SC3].

This means that whilst Senior Managers do not have to have a ‘hands on’ role for every operation undertaken in their area of responsibility, they must take reasonable steps to ensure that appropriate procedures and systems are in place and followed, allowing the business to run effectively.

Of course, in large, complex firms, it would be virtually impossible and very unwise for a single Senior Manager to try and do everything. ‘Reasonable steps’ would likely include delegating responsibilities to others, whether in-house or to external contractors, to allow the business function to run smoothly.

Where delegation takes place, however, the person given the task must be reasonably considered to possess the appropriate competence, knowledge, skill and experience to deal with the delegated task or activity.

Overall responsibility remains with the Senior Manager so it is vital that, when delegation takes place, an appropriate degree of oversight should be exercised. This involves making sure that the extent of the delegated responsibilities has been clearly outlined and that performance is monitored and challenged appropriately.

Appropriate monitoring may include asking for reports of work done, which should be questioned and critiqued by the Senior Manager responsible. If the Senior Manager suspects a problem, they should intervene in a timely and decisive manner to make sure the issue or task is dealt with and any remedial action taken.

If a Senior Manager delegates responsibility to the ‘wrong’ person (i.e. someone who would be reasonably considered unsuitable for the role) and something goes wrong, this could potentially constitute a breach of the FCA’s Conduct Rules.  Similarly, if a Senior Manager disregards or ‘forgets’ about a delegated activity and leaves a subordinate to simply ‘get on with it’ unchallenged, this is poor management and may also lead to a breach.

Effective delegation can therefore keep the firm and Senior Managers on track, but delegation also brings with it wider benefits, including improved staff development, confidence and potential for succession planning. It can bring positive value both to the firm and the person who has responsibilities delegated to them.

About the author

Nathan joined RWA in 2016 on successfully completing his PhD. He previously worked in the private, public and charitable sectors. Nathan leads the content and professional standards team at RWA and is responsible for managing and curating technical content on the Aviva Development Zone and the award-winning My Development Zone e-learning platforms.

Since joining RWA, Nathan has written hundreds of business skills e-learning modules and assessments on a variety of subjects, including leadership and management, communication skills, human resources, employability, regeneration, citizenship and equalities.

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