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Compliance and HR teams must work together to get ahead of SMCR deadline and resolve potential conflict

The deadline for solo-regulated firms to implement the Senior Managers and Certification Regime (SMCR) is now just three weeks away (9th December 2019). SMCR increases the burden on firms to ensure that their people are “fit and proper” to carry out regulated functions and that high standards of conduct are upheld.


According to Michael Lewis, partner, and Camilla Neate, associate director, at Osborne Clarke, although making employees more accountable for their conduct and competence is commendable, financial services companies must set the wheels in motion now if they are to meet this deadline. A collaboration between compliance and HR is critical to make execution effective as there is plenty of potential for conflict between FCA requirements and people’s rights. 


Victoria Parry, partner at Osborne Clarke, commented, “Now that the SMCR has been applied to banks for over three years, we have plenty of experience of its impact on people management and HR processes. Our experience is that a close partnership between Compliance and HR is critical to implementation – working together to resolve the potential for conflict between the strict FCA requirements and people’s rights under employment law. Indeed, asking your staff to take on additional responsibilities with significant personal liability and a higher level of scrutiny may be a hard sell in some cases. However, clear and constructive communications from the start of the implementation process and throughout will be key to ensuring staff embrace the new regime and understand and are comfortable with the key implications of it for them.


"Firms need to work out how SMCR applies to their staff and document the allocation of responsibilities. We recommend a review of employment contracts, in particular in relation to individuals who will become senior managers or who will be certified. Firms will need to have procedures and policies in place to deal with fitness and propriety assessments, the conduct rules, and regulatory references. Firms are also required to ensure that staff are trained on the conduct rules.”


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