SM&CR: A Practice Focused Perspective

I am now seeing larger brokers working out formal plans for the forthcoming implementation of the Senior Managers and Certification Regime (SM&CR). I would therefore urge all general insurance brokers, including all those with more modest incomes, right up to those earning £35m in fees and commission, to start considering the true impact of compliance with the new regime.

Leaving aside a Senior Management Function holder, most brokers will typically have in place business unit managers, team leaders or similar and other individuals in a supervising capacity, who are probably not the most senior people in the business, but nonetheless carry out roles that might have the ability to cause harm to the firm or its customers. These roles are caught by the Certification Regime.

My view is that the most senior individuals within these sorts of structures will include individuals carrying out roles which can impact the way you conduct business, including roles in non-revenue-generating business areas.

This is why you should now start giving some thought to identifying who these individuals might be, looking carefully at the existing accountabilities of all such individuals, as well as considering any potential responsibilities which may come about in the near future, perhaps as a consequence, for example, of your sales or business growth plan.

I think it’s vital that all brokers pause for a moment and take stock, as there is, I believe, a hidden level of complexity which must also be considered.

By now, most of you will know that individuals falling in-scope of certification (currently including those under CF29) and including contractors, are those individuals in roles that do not need to be approved by the FCA. This applies to all brokers including, for example, a sole trader with employees.

Firms must certify fitness and propriety and understand how the FCA’s conduct rules apply to each individual respectively. That is just a part of meeting the requirements of the Certification Regime.

The added complexity is that certification extends to include individuals with solo responsibilities that you may have historically allocated to meet those required by the FCA Handbook. It’s important to consider these carefully as the introduction of SM&CR does not mean that these responsibilities or those required by other existing legal and regulatory provisions fall away (such as a MLRO).

I believe it’s fair and reasonable for the regulator to assume that firms of all sizes are covering off these matters during the early planning stages and thinking about the support they will provide to such individuals as a matter of good governance. Remember SM&CR also expects firms to consider organisational culture and behaviour, and how the firm will encourage staff to take personal responsibility for their actions to improve conduct at all levels.

These individuals will be important to your business now and into the future and will therefore need investment. They are individuals clearly caught by certification now and post implementation so it’s worthwhile all brokers beginning to consider these aspects. At this stage it doesn’t need to be formally mapped, although this is what I would recommend as part of progressing your plans. A Responsibilities Map is a requirement for enhanced firms.

As you can see there is quite a lot to take in, purely on certification.

We are here to help and we have created different levels of support to help firms of all sizes work through the requirements of SM&CR. If you think you need help, please get in touch.

About the author

Ash is Managing Director at RWA. He has over 15 years’ experience in the legal and compliance field and ten years in broker sales and leadership roles in national and global insurance firms.

He is highly skilled in the application of risk-based regulation, working closely with businesses at executive and board level to develop commercially viable, compliant systems and controls. Ash is adept in providing solutions-based interpretations of the FCA’s technical standards and facilitating the transfer of compliance skills and education needed for businesses to self-manage their own compliance and training needs.

Get RWA Insight In Your Inbox

Regular business news and commentary delivered direct to your inbox each week. Sign up here