One week left for SMCR conversion notifications warns FCA

The FCA has warned (re)insurers that they have one week left to submit conversion notifications for the SMCR (senior management and certification regime) in order to be fully compliant. 

The regulation is being extended to the insurance and reinsurance sector on 10 December to increase individual accountability.

It applies to all (re)insurance firms regulated by the FCA and the PRA. It follows the same regime being applied to banking.

Accountable

Through this extension of the SMCR, the regulator is seeking to encourage a culture where staff at all levels take personal responsibility for their actions while identifying who is responsible for what.

Jonathan Davidson, executive director of supervision- retail and authorisations at the FCA, explained that: “The SMCR is an important way to ensure that individuals take personal responsibility for their actions as well as firms.

He said it is “designed to make all financial services staff individually accountable for being competent and diligent and for acting with integrity in the interests of customers.”

And it also holds senior managers to account for their own behaviour and how they lead staff.

Davidson explained that the FCA see culture as a “key root cause” of major conduct failings and is committed to “transforming culture in financial services.”

But he stressed that the it was “not a box ticking regime,” and more about creating a healthy outcome.

SMCR

SMCR is a new regulation that will convert relevant individuals from the Approved Persons Regime to the SMCR.

It replaces the senior insurance managers regime (SIMR) and the revised approved persons regime for insurance firms.

Insurers will have until midnight on the 2 December to submit a conversion notification while identifying staff for certification and ensuring that they have the relevant training.

Firms will need to submit the following:

• Form K
• Responsibilities map
• Statement of responsibilities

The regulator said that the culture and governance of firms is an “ongoing priority.”

New rules

The FCA’s new rules will ensure firms’ governance arrangements are transparent and set clear expectations for the conduct of all financial services staff.

It is intended to set a “minimum standard of individual behaviour” in financial services, meaning senior managers who perform key roles will need FCA or PRA approval before starting their positions, accompanied with a clear set of responsibilities that states what they are accountable for.

Meanwhile the certification regime will apply to employees who are not senior but whose role could cause “significant harm” to the firm or its customers. In this case insurance firms will be asked to check all candidates are “fit and proper” to perform their role at least once a year.