FCA’s SMCR Stocktake Report

Peter Griffiths

Peter Griffiths

45 individuals interviewed across 15 Banking institutions

In what has been described by the FCA as an SM&CR “Stocktaking Report” in the Banking Sector, the most recent FCA publication gives us an insight into what they found across the sector.

Why did the FCA conduct this review?

The FCA noted that they wanted to better understand how SM&CR has been embedded into the banking sector in the 3 years since it was introduced. They were interested to understand whether there are any issues that warrant more focus from firms and the FCA.

What they did: …

The FCA conducted interviews with 45 people at 15 banking sector firms as well as trade associations, the Banking Standards Board and customer facing officers from the FCA and PRA.

The key element of the review was interviews with individuals in firms who have worked with SM&CR. The banks selected for this review came from across the sector, including large and small wholesale and retail banks and building societies.

The review covered a wide range of themes, including:

  • senior manager accountability
  • certification
  • regulatory references
  • conduct rules
  • impact on culture
  • unintended consequences
  • embedding and overcoming initial implementation issues

The findings were based on interviews only and although the FCA did not validate the interviews through reviews of documentation, they found a high level of commonality across these interviews and so believe that the results are likely to be broadly representative of the sector. 

Focus on Certification: …

From a Worksmart perspective, I want to focus specifically on the comments around implementing and managing an in-house Certification Regime.

The report itself notes the following: …

Evidence from the review undertaken indicates that firms have implemented processes to oversee the certification population. Encouragingly, they have taken steps to ensure their frameworks are robust with several checks and balances in place to support the competence assessment and provision of training.

In line with our experience, the multitude of banking clients that use our Accord solution for Certification have indeed put a lot of time and effort into creating their process management and assessment frameworks. 

However, with the majority of clients we have seen that, in the rush to get SMR governance mapped and assigned they interpreted “Certification” as the lesser end of the SM&CR implementation challenge.  Our experience is the exact opposite!  We describe it as for many organisations the “heavy lifting” element of the SM&CR regime.  And the reason we do so is very much aligned to the observations that the FCA have made throughout this report. 

Firms have had to move to assess staff not only for technical competence but also across behaviours demanded of their particular certified role.  And where individuals are subject to other “Competence Assessments” such as those required under the TC rulebook, MiFID II or the IDD, firms appear to have found it particularly tricky to gather up evidence across a range of competence measures aligned to the requirements of the different regulatory rule books.  The reason for this is that typically the evidence invariably sits in paper files, spreadsheets and/or HR and LMS solutions.

It was interesting therefore to note the following comments from the FCA:-

“Most firms could not demonstrate the effectiveness of their assessment approach, use of subjective judgement or how they ensure consistency across the certified population”.

“The FCA did not see evidence in general that firms had made significant changes to their performance assessment processes other than incorporating expected behaviours. For instance, it is not clear that firms are using the Certification Regime to evaluate if managers of certification staff (who are themselves certified) are competent managers”.

So, the question we ask of firms from our stance as a multi-awards winning SM&CR solution and regulatory consulting provider is;

“If you aren’t going to harness the power of technology to help you manage the requirements of the regime, how are you going to achieve the following:-

  1. Consistency of approach to assessment
  2. Automation of activity enablers to assist managers to gather relevant evidence
  3. Transparency of recorded information against each individual
  4. Ability to gather together a variety of competence indicators
  5. Ability to manage a multi-sign off approach”

If you’ve not thought about or are not aware of how a SaaS provider such as Worksmart could help you most effectively implement and manage your Certification Population, then now might be the time to get in touch.

Our multi-award winning team are here to help and with more regulated entities in the UK using our Accord SM&CR solution than any other provider, the many banking organisations that chose to partner with us can’t be wrong!

You can access the full FCA’s stocktake report by clicking here.

To find out more how Worksmart can help your firm embed SM&CR, contact us our expert team for a no obligation introductory call; 01908 613613


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