On March 7, 2016 new regulations came into effect for banks and insurance companies. Known as the Senior Managers Regime (SMR), it means that all those who are designated as senior managers or certified persons are personally liable for any regulatory breaches in areas of their responsibility – in simple terms, this differs from the previous Approved Persons Regime, where it was not always clear who was responsible if things went wrong. This is also part of an ongoing effort to change the culture of financial services and switch the focus to individual accountability.
If your manager is a certified person, it means that he will now need to be certified as fit, proper and competent by the bank, rather than by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA), as in the past. This means that the bank will have to come up with a process to certify all those who were previously approved persons are now certified persons. Part of the regime means that senior managers and certified persons have to adhere to five conduct rules:
• You must act with integrity
• You must act with due skill, care and diligence
• You must be open and co-operative with the FCA, the PRA and other regulators
• You must pay due regard to the interests of customers and treat them fairly
• You must observe proper standards of market conduct
But more importantly for you, from March 7, 2017, almost all other bank and insurance staff will also be expected to adhere to these conduct rules. The good news is that the rules are fairly self-explanatory and make good business sense. You will hopefully also receive some training later in the year to make the rules clearer for you, and explain how to avoid breaching them.
The conduct rules are designed to set a minimum standard of behaviour for all staff. A key element is that you must always act with integrity. If you are in doubt about doing anything, you must ask your manager.
The other thing to do is to familiarise yourself with the compliance rules that apply to your part of the business. In particular, focus on day-to-day issues like data-sharing and personal share dealing. Be wary of sending company data to your home email – this would normally be treated as a breach of conduct rules and be regarded as “data leakage”. So check out what your firm allows and does not allow.
In terms of personal account dealing, be careful about making sure to check with compliance before dealing in any shares or bonds, as you may also be responsible for any people connected to you who deal in shares too.
So, in essence, the key thing for you to do is to get to know the conduct rules and how your firm will be implementing them later this year.
• Andrew Pullman is managing director at People Risk Solutions