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SMCR – Haven’t we nailed it yet?

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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.

In a time where it is clearly becoming more challenging for compliance teams to keep on top of an ever-changing regulatory landscape, one thing that strikes me is that regulated firms either need bigger compliance teams and/or to create ring fenced budgets for RegTech in support of regulatory processes.

A bit of a biased statement you might say, but hey, we are a RegTech firm after all!  But seriously, at a recent virtual event that we ran, once again we were surprised by the regulatory initiatives that attendees said were of most concern to them.  The clue was always in the title wasn’t it, yes SM&CR was identified as the biggest challenge facing firms currently, even in light of the Operational Resilience agenda, the new Consumer Duty of Care and other competing regulatory priorities.

So, why 6 years in for Banks and Insurers, and 2 years in for solo regulated firms is SM&CR still an area that is a real cause for concern within regulated firms?

Part of it I think is culture, some firms are still ticking those boxes because they must.  But in part there are those firms and folks that are truly trying to achieve the cultural change from SM&CR that both the PRA and the FCA have said they expect but are struggling to achieve it.  Why might that be?  Well, it seems from what we see that it is a combination of lack of resource, RegTech, expertise and regulatory guidance.  Whilst the FCA regulatory tells us “It is up to the firm to decide” when implementing much of this regulatory change, sometimes a greater level of support would make lives a lot easier when firms are trying to truly implement and embed regulatory change for the better.

And this is where I would advocate solo regulated firms to also keep abreast of what the PRA are doing in this space. I’ve regularly drawn attention at our own SM&CR briefings to the great research papers, evaluations and support documents that the PRA put out, quite often they are hard to find, but when you do, they can help enormously. The one I want to focus on here is the imaginatively entitled “Inventory of Senior Manager Responsibilities.” This is not a supervisory statement, its not a consultation, policy or research paper, it’s actually an excel spreadsheet!

In this small and unobtrusive spreadsheet, I think that the PRA have actually hit upon a really helpful mechanism to show firms how important SM&CR is and that it is a “living” piece of regulation that constantly needs to be managed and aligned to other regulatory change. By listing every supervisory statement, and regulatory speech where SM&CR commentary is covered, this spreadsheet has then mapped the regulatory topic to the regulatory expectation in respect of Senior Manager accountability and SM&CR. For that reason alone, I think this publication is invaluable to all those individuals that are either involved in managing SM&CR or are subject to is as a Senior Manager.

When you delve into the detail of which the item above is an excerpt of, you will see that they have reviewed large regulatory statements and long speeches and taken the time to identify the connectivity to SM&CR. They then identify the SMF that they think this applies to (if indeed there is an obvious candidate) and then they list out their expectations and/or actions, invaluable!
So, for those of you that don’t make trawling the PRA website a regular part of your regulatory research, it might be worth keeping an eye on relevant future publications.

Strengthening accountability | Bank of England

But having the most up-to-date regulatory information and knowledge is only part of the battle when it comes to SM&CR. Without the relevant tools to do the job, then the knowledge in itself will not allow firms to demonstrate the cultural change the regulators are looking for and indeed the reasonable steps that senior management will need to demonstrate.

That’s where Accord, our award-winning SM&CR solution comes in. Our team are available to you as a resource. Click here to arrange a free and no obligation consultation and start that conversation about the value that RegTech can add to your organisation.

Like to know more about how we can support you?… reach out to the team at info@worksmart.co.uk or book a meeting and request a demo of Accord, our purpose built and affordable SM&CR solution… find out how the latest RegTech can help you

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