SMCR refers to the Senior Managers and Certification Regime, which has been designed to help protect your business from staff misconduct, penalties, lawsuits, and any negative press or publicity that may follow. The regime aims to strengthen market integrity by giving greater accountability to senior employees and ensuring they have the skills and knowledge to act in the best interest of the customer and business as a whole.
The FCA (Financial Conduct Authority) implemented this regime in early 2016. It is designed to increase the accountability of senior management within businesses. SMCR is now applied to all FCA firms. It means these businesses must demonstrate compliance with operational processes, which can differ with each role. Following SMCR compliance can sometimes be complicated and difficult to navigate, so some businesses use external companies to aid this work. These companies can use bespoke technology, such as an SMCR compliance tool, to address business needs.
Why was SMCR introduced?
There were some questions over the reliability of the previous program, such as uncertainty around management roles and responsibilities. This came under scrutiny from the government and the SMCR system was developed as a replacement. This new regime aims to clarify who is responsible for what in the company and it encourages transparency, honesty and best practices going forward.
Understanding the disciplinaries
The SMCR regulation holds individuals (rather than the business) to account if there is a breach of conduct. Although it is still the business’s responsibility to perform a series of checks on their employees before joining the company. Background screening of a new employee is crucial, however, there must also be a system in place for regular checks on existing employees. If a breach of misconduct does occur, the FCA could act against the individual employee, or the company, or both.
How to remain up to date with new compliance legislation
By formulating a solid structure of clear compliance processes your business will help to navigate and keep on top of new legislation. When beginning your compliance process, the key is to identify your senior managers, what their roles consist of and then create a series of compliance checks for these roles. The next step is to allocate responsibility for making sure these checks are completed – this may be allocated in-house or outsourced to an external company.
Ensure sufficient screening is in place
Employment screening and checks are the main way to prevent your business from the risk of misconduct. There are varying levels of checks, depending on the responsibilities in a specific role. It’s important to have the correct screening in place for each role. These tests will evaluate whether individuals are correctly trained, reliable and able to carry out the responsibilities within their roles.
