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03 December 2015

The FCA & Personal Accountability - Get Ready for March

A speech on Personal Accountability delivered yesterday by Tracy McDermott, Acting Chief Executive of the FCA includes some important information and guidance which is relevant to the financial services sector.  

The speech focused around the FCA's two new regimes ie the Senior Managers Regime (SMR) and the Certification Regime (CR), both of which form the foundations of the FCA's new framework which will be implemented in March 2016 to improve individual responsibility and accountability.  

At this time the framework will only be relevant to Banks, Building Societies and Credit Unions but in 2018 it will be extended to include all sectors in the financial services industry, including the home credit sector. 

The regimes emerged from a troubled period in the Financial Services industry when there was too much focus on revenue generation and not enough emphasis on effective risk management and serving customers.  

To summarise, the objectives for the two regimes are as follows:

  • SMR - seeks  to promote a clear allocation of responsibilities to key decision makers, strengthen their individual accountability and encourage individuals to take greater responsibility for their actions
  • Certification - encourages firms to assess and certify, at least annually, the fitness and propriety of their staff.


However, regulators cannot deliver an outcome whereby industry serves its clients in a way that society deserves and expects.  The industry must do this and firms need to take ownership of the regime to rebuild the trust of the public and embrace the opportunities that are presented for their businesses. 

So what do firms need to do to get ready?

  • The individuals who hold senior management functions need to be identified and responsibilities clearly allocated to these people eg for countering financial crime or training senior staff
  • Firms need to think about any potential gaps - is anyone or anything missing?
  • Any senior manager who has overall responsibility for a whole area or activity in a firm needs to be added to the list, regardless of job title
  • Firms must record the resulting allocation of who is doing what in the form of short statements for each individual and an overall map for the firm as a whole


Tracy's conclusion sums up the ultimate aim of the new regimes succinctly:  

"The prize for all of us in that will be a vibrant and innovative financial services sector, underpinned by a strong sense of accountability, that aims to build and maintain the trust and confidence of society, and is thus able to meet society’s needs."

Visit the FCA website for details of the full speech or the FCA's press release from March on personal accountability.  For more information on the extention of the framework being implemented in 2018, read the HM Treasury's document.

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