By David Biggin, PA financial services expert
Regulators have announced a new set of rules to tackle misconduct in financial services. From March 2016, the stakes are getting higher for senior managers, they will be held personally accountable for wrongdoing in their organisations and, should they not meet these new measures, face criminal charges.
Supporting banks to prepare for the implementation: the new rules
The new Financial Conduct Authority and the Prudential Regulation Authority rules are made up of the Senior Managers Regime, the Certification Regime and Conduct Rules. The Senior Managers Regime clarifies the lines of responsibility at the top of banks. The Certification Regime requires firms to annually assess and certify individuals who could pose a significant risk to the firm or to customers. The Conduct Rules apply to all non-ancillary staff requiring them to comply with a new two-tier structure of Conduct Rules.
Taken together, they will impact the majority of staff in banks in the UK. And they place a particular burden on senior managers who will have to prove that they have taken reasonable steps to prevent any breaches of the rules in areas within their remit.
Preparing senior managers for SMR: six key actions
Banks need to start preparing for these changes now. Using PA’s experience of working for both regulators and banks we have set out the six critical steps they need to take to meet the new demands:
Assessing: Complete an initial diagnostic assessment of current operations to test compliance with the requirements of the accountability regimes.
Ensuring: Check HR teams have the right processes in place across the employee lifecycle.
Diagnosing readiness: Assess whether each Senior Manager can demonstrate that they have taken reasonable steps to prevent any failure or regulatory breach in their area.
Designing a control environment: Put in place an enhanced control environment that ensures that the operational changes to comply with the new rules are sustainable and working efficiently.
Preparing: Provide targeted training for the Board to develop members’ knowledge and understanding of what they need to do to comply with the Senior Managers Regime.
Mobilisation: Put in place a well-structured change programme to ensure the organisation meets the March deadline.
PA provides expert delivery and assurance support across each of the areas affected by the SMR, Certification Regime and Conduct Rules, underpinned by a strong track record of delivery with both national regulators and banks.
For more information about how PA can leverage our expertise to help you meet these new regulatory requirements, please read our related insights, 'Senior Managers Regime: are you taking reasonable steps?'.