Implementing Certification In Solo-Regulated Firms – The Challenges & Priorities

Julie Pardy

Julie Pardy

With more than 30 years service in the Financial Services industry Julie has spent many years at the coal face undertaking a wide variety of roles in banking from Compliance to Sales, Operations to Training.

On Thursday 4th June, 2020, Julie Pardy, Director of Regulation & Market Engagement (Worksmart) joined the London Institute of Banking and Finance (LIBF) to discuss the implementation of SM&CR for solo regulated firms, particularly the challenges and priorities for those teams responsible for implementation.

The Webinar focused a number of practical issues ranging from the challenge of identifying competence measures across multiple roles to implementing and managing a robust, consistent and evidential process for Certification. Additionally, attendees were also asked about plans for implementing the new Tier 1 and Tier 2 Conduct Rules. Understandably, these topics generated a very discussion!

To gauge feedback from attendees during the webinar, we asked attendees four general questions. Their feedback provides some interesting insights into the priorities and concerns of the sector:

1) Under SM&CR, will you be captured within your firms’ certification regime?

Attendees were asked about the extent to which their firm had managed to adhere to the regulator’s expectation that the roles falling under Certification were identified no later than 9th December 2019. It is perhaps worrying that almost a  third of attendees didn’t know if their role was subject to the regime or not. This tends to align to the FCA’s concerns that there is still some uncertainty the inclusion of certain roles in Certification. 

2) Under SM&CR, if you’re captured within your firm’s Certification Regime, what changes have been made to your internal competence assessments to accommodate this?

It comes as no surprise that the introduction of Certification has required firms to ‘beef up’ existing processes and in some instances develop new activities. It was a surprise to find that some organisations have made zero changes to their existing competence assessments. From our experience, we would have expected more firms to have updated their performance appraisal process (only 37% have) to be more rounded and detailed. By contrast, the fact that 69% of attendees’ firms have enhanced their T&C regimes is a very positive statistic.  However, bearing in mind though that Certification of individuals is a key regulatory tool in improving competence across financial services, we thought the scores across the piece would have been higher.

3) What training has your organisation provided in respect to the new Conduct Rules?

The regulator has said that people must be trained on the Conduct Rules in a manner that is relevant to their role. The results of this question tells us is that only 44% of people have been grouped by role and had the role relevant training. This must come as a concern. Although the training itself doesn’t have to be face to face, for it to be meaningful, it must be role relevant. This is reinforced by the fact that and when the FCA did their SM&CR stock take report in the banking sector, a key area they highlighted as a key concern  was that the banking sector had typically not delivered conduct rules training against their ‘role relevant’ standard. Seeing this being repeated again for solo-regulated firms suggest that organisations has not taken note of lessons learnt in other sectors.   

(For those of you that have not seen the output of the stock take report, this can be found via the following link).

LIBF webinar SMCR

4) Under SM&CR, what is your biggest personal concern going forward?

On a personal level, 41% of attendees identified passing the certification assessment as their biggest concern. Our advice is, if you’re subject to certification, speak with your managers and talk to them about the following:

  1. What do I need to do?
  2. What evidence do I need to provide?
  3. What is the assessment going to look like?
  4. Who is going to be assessing me?
  5. If I don’t agree with the assessment, what is the right of reply?

Taking responsibility for your own competence and development in conjunction with those proposed by your firm will help you feel more in control of the process being applied to you.  Raising your interest and queries early in the process will help to better understand what the assessment will consist of and ensure you are fully prepared for this.

Quite a sizeable number of attendees (26%) are concerned about being allowed time and support for their own personal learning. In the current CV-19 situation, there is confusion around if this is allowed or not for those that may have been furloughed. The website  states that, if you are furloughed you can’t do activities which contribute to money generation but you are allowed to undergo training.

On another note, the regulator has recently provided advice that in exceptional circumstances an employee is allowed to let uncompleted CPD hours in 2020 move into 2021. (Click here for more information on the detail of this announcement). 

In summary, what these results tell us is that there is still some way to go for firm’s in fully implementing  SM&CR within solo regulated firms, however there is still time as currently the regulatory deadline still stands at 9th December 2019 for both Certifying staff and providing role relevant conduct rules training to those that require it.

Your interaction with our webinars encourages us to work harder to provide you with more regulatory news and resources. Your honesty during the polls gives us fantastic insight into what it’s like on the ground for those subject to the regime, so thank you. We look forward to welcoming more individuals onto our next webinar which can be found in the Events section of our website.

If you would like to find out more about our software Accord and how it can help your senior managers stay compliant, please visit our website.

Email us at or call our friendly team on: 01908 613613


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