The FCA have been very keen to overhaul the very concept and principles of accountability in finance and thus, the Senior Managers and Certification Regime (SMCR) has been rolling out for the last few months. Amongst its requirements, have been a large degree of retraining for those working in the sector (read more), to ensure everyone necessary is up to speed with the requirements of this regime.
Since the 2007-8 Financial Crash, the UK has been reeling with some calling for more extreme measures to protect the economy than others. However, one area of almost unanimous agreement has been that consumers and borrowers need to be better protected and therefore new approaches to regulatory frameworks and compliance have been devised.
One of the most notable implementations of noticeable regulation was in 2014 when the FCA hit the loans industry in the UK, particularly payday loans with swathes of rules, regulations and requirements which have changed the way money is lent and borrowed as well as how the overall UK loans sector operates. Now however, the regulator has switched its focus to almost all FCA authorised firms with SMCR and all the changes it is bringing.
Out with Old-Fashioned Compliance Blame Games
A major flaw in the UK Financial Industry has been identified as the blame culture which exists in financial firms, particularly those which offer consumer-focused products. This in previous times meant that the way in which credit and financial services are regulated will be changing massively. In past times, compliance operated within companies with a compliance team or officer responsible for everything regulation and compliance.
This meant that all oversight and responsibility lay squarely at the compliance peoples’ door. Part of the problem that emerged was that everyone else within the companies having to abide by compliance and financial regulation simply passed the buck to the compliance officer or team. Effectively ‘washing their hands’ of all responsibility meant that there has been no degree of personal accountability or responsibility within finance.
The FCA however are putting a stop to this and with the new SMCR programme being rolled out, each level; employee and manager within a company will have their own remit of responsibility and accountability both within the company and to the FCA.
Who Does SMCR Affect?
Covering all but a few types of FCA regulated firms in the UK, any company offering financial services, advice, loans, credit and more are subject to these new rules. This includes everyone from denture repair laboratories in Manchester (find out more) providing credit to their local customers, to small brokers in Devon helping people secure first time mortgages.
Although there is a lot of industry-wide education being undertaken to spread the message with regards to who needs to comply with the new SMCR offering from the FCA, there are many who are totally unaware of their obligations. Thus, this regulation applies to the likes of (although not limited to):
– Financial advisors
– Insurance brokers and intermediaries
– Mortgage advisors
– Consumer credit providers
– Loan brokers and providers
Many companies, particularly those offering consumer credit in the form of any type of credit s part of a purchase agreement do need to undertake SMCR’s rules and regulations.
A large part of SMCR is that financial firms, regulated by the FCA, of all sizes must ensure management and staff undergo introductory training as well as annual refresher training. Over time, the hope in the industry is that with the increased personal responsibility and accountability, will come greater clarity and a much more efficient, open and honest UK financial sector.