VIEW: SM&CR: A powerful tool

On the 9th December, the final phase of the Financial Conduct Authority’s Senior Managers and Certification Regime (SM&CR) comes into place. What the FCA calls ‘solo regulated firms’ – firms that are regulated by the FCA but not the Prudential Regulatory Authority – must identify senior managers who will take responsibility for consumer outcomes. The new ‘duty of responsibility’ that will fall on these managers will make them accountable not only for everything that they do, but also for everything that a reasonable person would do if they had the same responsibilities. As a result, the SM&CR is as much about the problems that people don’t have the time or energy to deal with, as it is about deliberate acts of wrongdoing.

At first sight, this may look like yet another regulatory burden, but it doesn’t have to be like this. In the right hands, SM&CR can be a powerful tool for people who see problems and want to do the right thing. To take just one example, the SM&CR gives significantly more power to customer-facing staff who deal with complaints. It requires firms to describe, in detail and at the most senior level, who is responsible for the whole range of consumer outcomes. And because of the Duty of Care, this means setting out who is responsible if a problem exists and no one does anything about it.

For a member of staff who is dealing with a difficult complaint, and who can see systemic problems that will make the situation occur again, SM&CR gives them the right to raise these systemic issues at the highest level, asking questions like, ‘who has responsibility for these outcomes?’ ‘How have they retained accountability for this?’ ‘Do they understand how they are exposed to liability given the way things work in practice?’ Unlike whistleblowing, the SM&CR is not just focused on speaking up when things have already gone badly wrong, but it is also about prevention – making things work for consumers before serious breaches have occurred. It gives more power to professionals to deal with problems, and it is good news for consumers.

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