Senior Managers Regime – doing the right thing and maybe being seen doing the right thing?

Headlines:

• Advisory firms must ensure they fully understand the implications of SMR and Certification regime and Conduct Rules.
• FCA are trying to raise standards in the industry on conduct risk and corporate governance.
• We could see a major impact on business models as firms de-risk investment solutions.
• Review existing processes and accountability in the business and possibility of these regimes to substantially impact on business models.
• Firms must document their governance structure, appoint SM’s and train staff appropriately.
• Regimes will result in increased documentation of areas of responsibility.

Key issues and challenges:

• Allocation, appointment and training of senior managers.
• Understanding the new certification requirements for below senior manager roles, including advisers.
• Documentation of senior manager roles and responsibilities, governance and conduct risk processes.
• Creating process development for managing “fit and proper” processes for advisers and other staff.
• Develop M.I. (Management Information) to assist senior managers in managing their responsibilities.
• Could we see a move towards the Network Model?
• Understanding the revised certification process of advisers with onus on firms to approve new advisers and review annually.
• Consider the role of TC (Training and Confidence) in the future.

Conclusions and solutions:

• Map existing business and areas of responsibility into the SM & CR regime.
• Consider carefully who are the most appropriate people to assume responsibility in each area?
• Ensure each senior manager has sufficient visibility, MI and authority to discharge their duty in that area.
• Develop training plans for all staff to understand their conduct responsibilities.
• Start with a detailed organisation chart and a “root & branch” analysis of the current business structure and what is required in the future.
• Review business model – is it appropriate and aligned with governance structures.
• If running an Investment Committee defines terms of reference, roles and selection processes.
• Consider if running your own Central Investment Proposition is appropriate?
• Review adviser and non SM role certification processes.
• Relook at the role of internal committees e.g. investment committees.
• Map existing business and areas of activity into the SM & CR regimes.
• Consider carefully the most appropriate people to assume responsibility in each area.
• Ensure the SM has sufficient visibility, M.I. and authority to discharge their duty in the area.
• Ensure certification processes are in place for annual processes and new starters.

Experts: Alan Hughes - Foot Anstey, Tony Bray- threesixty
Facilitators: John Chapman and Neil Baines-Thomas - Owen James Group