Less than 2% of firms prepared for UK's SM&CR regime - survey

Jonathan Boyd
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A survey published by ACA Compliance Group has found that less than 2% of relevant regulated firms are prepared for the UK's Senior Managers & Certification Regime, which came into effect in March 2016 for deposit-taking firms and dual-regulated investment firms, and which was recently subject to a Review published by the UK Financial Conduct Authority (https://www.fca.org.uk/publications/multi-firm-reviews/senior-managers-and-certification-regime-banking-stocktake-report

The regime will apply to so-called solo-regulated firms come December 2019, while insurers have been subject to the Regime since December 2018.

However, according to the key findings of the survey of more than 70 respondents - including asset managers, hedge funds, private equity firms, broker-dealers and wealth managers - there is a significant amount of preparation still outstanding in the industry. The survey found that:

•         Less than 2% of firms confirmed they had completed sufficient preparation for SM&CR

•         In equal measure, only 2% of employees had a sufficient awareness of the new rules and their implications across the organisation

•         More than a quarter of firms surveyed admitted there is minimal general awareness of SM&CR outside of the compliance teams 

•         Almost two-thirds (60%) of firms surveyed are one-third, or less, of the way through their SM&CR projects

According to Adam Palmer, partner at ACA Compliance Group (pictured above): "Without a doubt, solo-regulated firms need to accelerate the pace at which they are preparing for theSM&CR in the UK. It's a long road ahead for 98% of firms and it's clear the amount of work required ahead of the deadline is being underestimated. For some, the coming of this new regime will necessitate substantial changes to both governance and culture."

"There are new policies, processes, and documentation that solo-regulated firms must implement. The engagement that must take place with certain individual employees will take time if firms are prepared to make the necessary changes to their overall business culture required by the regulator. In addition, employees across the firm need to be trained on SM&CR individually, as it will in many cases touch on their day-to-day roles. It's important for firms to start working on SM&CR in earnest today."


Jonathan Boyd
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Jonathan Boyd

Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope.