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Compound Growth

5th May 2016

FCA Evidence session to the TSC:

The Treasury Select Committee has now published a transcript from 26 April 2016 of an evidence session attended by FCA representatives - Tracey McDermott (acting CEO of the FCA) and John Griffiths Jones (Chairman of the FCA).

As part of its scrutiny on the Financial Conduct Authority's work, the Treasury Committee is tasked with taking evidence from top representatives of the FCA.

Items under discussion during the session included not only the independence of the Financial Conduct Authority and the interview process for the role of CEO at the FCA (appointed to Andrew Bailey) but also the Senior Managers Regime, conflicts of interest, the Panama Papers, MiFID II, AML and the FCA’s Asset Management review amongst others.

Senior Managers Regime update:

The Senior Managers Regime (SMR) was implemented for the banking sector on 7th March 2016 and is expected to be extended to all other firms from 2018 in a bid to improve individual accountability across the Financial Services industry.

Six weeks on from the implementation of the SMR, Tracey McDermott informed the Treasury Committee that...

“The real proof of the pudding will obviously come the first time something goes wrong, when we can actually say, “Okay, so who is responsible for that?” If we get the line that “Actually, my statement of responsibility says this, but in fact that was not really me; it was someone else”, or “That was changed six months ago”, then that will clearly indicate that the regime is not working as it should.

The benefit of the regime is that, in that event, we would go to the person who is responsible for overall maintenance of the statement of responsibilities and say, “If the responsibilities map is not right, then you are accountable for that”. We will have to test it in anger when things go wrong, so to speak.

Avoiding the wrath of the regulator

So, whilst the Senior Managers Regime is still in its infancy for the banking sector, firms should take note – and especially those individuals within firms that are responsible for maintaining the statements of responsibilities – to ensure that the regulator is kept abreast of any changes affecting the mapping of responsibilities and that the statements of responsibilities are continually maintained.

If you would like support in reviewing your firm’s mapping and allocation of responsibilities or Statements of Responsibilities we’d be happy to help, so do get in touch.