The Senior Managers and Certification Regime (SM&CR) is a regulatory framework designed to strengthen the accountability of senior individuals working in the banking sector. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have set out detailed rules for monitoring, tracking and reporting on SM&CR which have been in place for some time in the banking sector. Ultimately these SM&CR requirements will be extended to all 47,000 financial services firms in the UK to a greater or lesser extent with the deadline of 10th December 2018 having been recently announced for insurers, reinsurers and managing agents.
The SM&CR regime defines a set of Senior Management Functions (SMF) which each include a defined set of prescribed and overall responsibilities which must be allocated to a senior manager within a firm. Additionally, the Senior Manager needs to be able to evidence that their Certifications and Continuing Professional Development (CPD) are up-to-date and that they are meeting a pre-defined set of conduct principles that demonstrates that their behaviours are deemed fit and proper (FIT).
In addition to Senior Managers, ALL staff must be assessed annually as meeting the conduct expectations and firms must provide and store annual certification of this compliance. Additionally, they must maintain accurate records of who holds the senior roles at all times, mapping Senior Managers against the Statement of Responsibilities (SOR) and notify the FCA of any changes during the course of the year. Clearly, managing this process manually in any but the smallest business is likely to be very difficult and worse than that – EXTREMELY RISKY!
As you would expect there are numerous regulatory systems on the market, however they are designed to report on the senior management aspects of this requirement only. They are rarely designed to capture CPD or conduct requirements in anything but a ‘tick-box’ way which may be suitable for compliance. However, if we take a step back, it seems obvious that evidencing and giving feedback on (conduct) behaviours fits logically within another annual process which should be pre-exisiting – the appraisal. This makes even more sense when we add in CPD.
In fact, running parallel processes of SM&CR and appraisal could even cause conflict. Of course, both purposes are wildly different, appraisals should be about enabling the individual to perform at their best, developing their skills, nurturing talent and ultimately increasing engagement and retention – a key priority for many businesses. On the other hand SM&CR is a regulatory process, it is there to eliminate risk and, perhaps most importantly the senior people in the business will be culpable if it doesn’t happen – so it is definitely NOT optional. Strategically, both are important – but let’s face it, in a fight between HR and Compliance we all know who will win every time!
Integration of the two processes has the potential to bring huge value to both by improving the take up and commitment to timely appraisal and with the right management, preventing SM&CR from being a pure ‘tick-box’ exercise by improving the quality of behavioural conversations and aligned development.
Unlike standalone SM&CR software or appraisal systems, Actus can provide a one stop shop for your appraisal and SM&CR requirements with the launch of our integrated SM&CR module: Actus Comply.
We were approached to develop this module by a member of the Financial Services Industry as they could see that Actus Performance Management Software already met a number of the requirements and there would be huge synergy in bringing them together. If you would like to take a look at how Actus could provide you with a one-stop solution to SM&CR and talent retention and engagement then please give us a call on 01582 793053 or request a demo using the button below.