With the FCA ‘Senior Managers Regime’ imminent, it business critical that Advisers fully understand the implications on governance and responsibility and are actively reviewing business processes, structures and accountability.
- 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