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FCA to extend senior managers and certification regime

The Financial Conduct Authority (FCA) has issued a warning to firms over their culture and governance in preparation for a new regime coming into effect on December 9, 2019.

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The FCA has already rolled out the senior managers and certification regime to banks and insurance firms and is extending the regime to the 47,000 firms it regulates, including providers of consumer credit.

 

The aim of the senior managers and certification regime is to establish what the FCA describes as “healthy cultures and effective governance” in firms by encouraging greater individual accountability and establishing a new standard of personal conduct. Senior managers will be required to take responsibility not just for the decisions they make, but for how they influence others, the regulator said.

 

Under the regime, all senior managers must have a statement of responsibility – which should be clear enough for everyone to understand what activities the senior manager is responsible and accountable for in the business.

 

Larger and more complicated firms are must have “responsibility maps” showing how the various jurisdictions senior managers have.

 

The FCA published guidance in March to give firms practical assistance and information on preparing statements of responsibility and responsibilities maps.

 

It is hoped under the regime that all financial services staff will follow five conduct rules:

  • Act with integrity;
  • Act with due care, skill and diligence;
  • Be open and cooperative with the FCA;
  • Pay due regard to the interests of customers and treat them fairly;
  • Observe proper standards of market conduct

Jonathan Davidson, executive director of supervision - retail and authorisations at the FCA, said: “Senior leaders should view the regime as a catalyst to inspire positive culture change at their firms. The senior managers and certification regime is an important way to ensure that individuals at all levels within firms take personal responsibility for their actions.

 

“It is good for business when employees buy into a firm’s purpose, feel personal accountability and are inspired to speak up and to listen. This can be encouraged through the new conduct rules. This kind of culture supports a healthy and inclusive workplace for employees, innovation and sustainability, and thoughtful identification and mitigation of risk.”

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