If it's not in there already, here’s a date for your diary next year: on 7 March 2016, the Senior Managers Regime (SMR) will be introduced. The Financial Conduct Authority (FCA) says that it is not looking for “heads on sticks” – but the new rules coming into force will undoubtedly make it easier for the regulators to hold senior individuals to account for failings. Although significant, there are things you can resolve to do in the New Year to prepare for this change.
No, not the novel you’ve been promising to start for years. The SMR is all about showing you’ve taken “reasonable steps” to discharge your duties. You’re going to need evidence for this. What did you have for lunch two Tuesdays ago? You don’t know? Imagine having to explain to the FCA in 2020 the reasonable steps you took in 2016. Given how long it takes for regulatory breaches to come to light, you’ll want written evidence to rely on, especially the steps you took to control your area of the business, why you did not take other steps, and why your decision not to do so was entirely reasonable.
STAY FIT (AND PROPER)
This doesn’t mean signing up to an expensive gym that you’ll never visit beyond January, but remembering that you too might need to blow the whistle. The SMR requires you to notify the regulators of anything you think they would be interested in. Failure to do so could affect your status as an Approved Person. If you’re not sure what kind of information you should be disclosing, take legal advice.
KNOW YOUR ROLE
The name of the game under the SMR is accountability. Your responsibilities will be listed in a form to be filed with the FCA (or Prudential Regulation Authority). So make sure you know what is going into that statement, known as a “Statement of Responsibility”. They could be the most important 300 words in your career.
It might be that, in researching your own role, you discover some gaps in your knowledge – now is the time to plug them. You have enough time to take the necessary training courses and ensure you aren’t singled out as someone with inadequate experience by your bosses. Or worse, something goes wrong and, through the SMR, the wrongdoing is pinned on your poor expertise. Look on this as an opportunity. Should you be renegotiating your contract to better reward you for shouldering these risks for your firm?
DON’T SHOOT THE WHISTLE-BLOWER
Retaliation against whistle-blowers could land you in hot water under the SMR. Getting revenge on a whistle-blower by, for example, zeroing their bonus is something the FCA intends to take very seriously. The SMR is strengthening the regulators’ focus on fitness and propriety, and your own professional record could be tainted if you treat whistle-blowers badly.
REMEMBER THE WORDS OF THE GLADIATOR
“What we do in life echoes in eternity,” as Russell Crowe said in Gladiator. At the same time as the SMR comes into force, firms must, if asked, disclose all information relevant to your fitness and propriety. This involves them asking all of your employers for the last six years for references, even if those employers are not banks. Six years is also the time the FCA will have from discovering any misconduct to taking regulatory action.