On 15 March 2021, the House of Commons published a briefing paper entitled “Executive accountability in financial services: the Senior Managers and Certification Regime”.
In truth, the briefing paper doesn’t say much that most people with an interest in the SM&CR won’t already know. However, if you are looking for a really good summary of the background to the SM&CR, this document certainly obliges.
Probably the one thing worthy of note is the commentary on enforcement of the rules. During the course of the Parliamentary Commission on Banking Standard’s investigations, criticism was levelled at the small number of enforcement cases brought under the Approved Persons Regime – which had been labelled a “complex and confused mess” by the PCBS. So, has anything really changed?
The evidence would suggest not – at least not yet.
Responding to a freedom of information request in June 2018, the FCA confirmed that it had 5 ongoing investigations into Senior Managers, 9 ongoing investigations into Certification Staff, and 7 ongoing investigations into Conduct Rules staff – a total of 21. Only one successful enforcement action had been brought – the £642,430 fine levied on Jez Staley, CEO of Barclays, for breach of the Conduct Rules relating to infringements of whistle-blowing guidelines.
Pursuant to another freedom of information request in September 2020, the FCA confirmed that it had opened a total of 34 investigation, with 11 having been closed without action – the suggestion being that only 13 investigations had been opened between June 2018 and September 2020. It remains the case that there has only been one successful enforcement action. So, not much enforcement activity despite the expansion of the SM&CR to the entirety of the financial services industry between these two dates. What conclusions, if any, can we draw from this? Given the delay in the introduction of a number of SM&CR requirements due to Covid-19, perhaps not too many. FCA CEO Chris Woolard has described the coronavirus pandemic as the “first real test” of the SM&CR. So, to give them the benefit of the doubt, perhaps the ‘first real test’ of the FCA’s bite is yet to come.
If you want to avoid being the subject of the FCA’s ‘bite’ – ensuring you have your SM&CR compliance fully evidenced and documented is key. Why not drop us a line to see how Corterum can help?