senior manager's regime changes 2015 - next steps
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Senior Manager’s Regime UK BANKING
Senior Manager’s RegimeSteps To Take
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Senior Manager’s RegimeSteps To Take
Why Change the APER Regime?• There has been insufficient or meaningless lip-service to personal
responsibility
• This has created an illusion of regulatory controls
• The ability for some people to claim “Nuremburg Defence” of “I was only following orders
• Some were hiding behind board/collective decision-making
• Regulators found it unrealistic to impose financial penalties or sanctions
• The individual incentives were not consistent with high standards.
Senior Manager’s RegimeSteps To Take
What Firms Are Affected?
• The FCA and the PRA are proposing that their new Senior Managers and Certification Regime will apply only to individuals working in UK banks, building societies, credit unions and PRA-designated investment firms (referred to as Relevant Firms).
• At present, the proposals set out by the FCA and the PRA in the Consultation Paper do not generally apply to the UK branches of firms that are headquartered overseas.
Senior Manager’s RegimeSteps To TakeWhat Is Changing?
The PRA and the FCA are jointly approaching the changes in providing;
• Senior Management Function descriptions
•Responsibilities maps & Individual Responsibility Statements
•Certification Scheme for key responsibles not under the SMR
•New Conduct Rules to replace the APER Code of Conduct
Senior Manager’s RegimeSteps To Take
The Parliamentary Commission on Banking Standards (PCBS) made some recommendations in June 2013
Recommendation Key points
New regime for individuals Senior persons regimeIndividual statements of responsibilitiesResponsibilities mapCode of practice (conduct rules)
Incentives for better behaviour Incentives / disincentives to reflect long-term risk and reward
New enforcement approach Reverse burden of proofPotential for criminal prosecution
Senior Manager’s RegimeSteps To Take
Therefore
PRA Senior Management Functions (SMFs)◦ Prescribed list of responsibilities that equate to SMF
FCA Senior Management Functions (SMFs)◦ Prescribed list of key functions that equate to SMF
Combined list of SMFs are broader than the corresponding SIF functions
PRA and FCA SMF regime to work jointly as a single cohesive regime
Existing SIFs grandfathered provided that the role remains the same.
Senior Manager’s RegimeSteps To Take
The List of SMFs
Include;
Senior Manager’s RegimeSteps To Take
Senior Manager’s RegimeSteps To Take
Senior Manager’s RegimeSteps To Take
Probably the easiest way to view the changes is to map the existing functions to the new set of SMFs.
We have shown this
in two sections
for you;
Senior Manager’s RegimeSteps To Take
The Second Section is
Senior Manager’s RegimeSteps To Take
GrandfatheringGrandfathering will only apply for the Controlled Functions and corresponding Senior Management Functions listed in the previous table. For all other Controlled Functions, prior regulatory approval will no longer be required and existing approvals will lapse when the new regime begins.
Such individuals may become part of the PRA and/or FCA Certification Regimes
Senior Manager’s RegimeSteps To Take
Certification RegimeFirms will need to certify at least annually, that employees performing Certification Functions are fit and proper, regardless of whether they were performing the role before the Certification Regime coming into force, or were approved by the PRA or FCA to perform a similar role under the Approved Persons Regime.
The different regulators will be focussing on their specific objectives but effectively the certification will affect those the …
Senior Manager’s RegimeSteps To Take
The Certification regimePRA
◦ functions that might involve a risk to the ‘safety and soundness of the relevant firm’
FCA
◦ SIF functions who are not an SMF
◦ Individuals in customer-facing roles that are subject to qualification requirements
◦ Anyone who supervises or manages a certified person.
No regulatory approval – the onus will be on firms to police and “certify” that individuals are ‘fit and proper’
Regulators will assess effectiveness of each firm’s “Certification Regime”.
Senior Manager’s RegimeSteps To Take
What are the new Conduct Rules?The new Conduct Rules that the FCA and the PRA are intending to introduce draw upon the existing principles for approved persons that are set out in APER. However, there are some key differences between APER and the new Conduct Rules.
The new Conduct Rules are split into two sections: the first section of the Conduct Rules (referred to as the ‘first tier’) applies to all employees who are subject to the Conduct Rules, the second section of the Conduct Rules (referred to as the ‘second tier’) only applies to individuals falling within the FCA and the PRA Senior Managers Regime.
Senior Manager’s RegimeSteps To Take
New Code of Conduct for SMFs – Tier 1
Senior Manager’s RegimeSteps To Take
New Code of Conduct for SMFs – Tier 2
Senior Manager’s RegimeSteps To Take
Steps To Take Before June 2015
Senior Manager’s RegimeSteps To Take
Senior Manager’s RegimeSteps To Take
Senior Manager’s RegimeSteps To Take
Senior Manager’s RegimeSteps To Take
Senior Manager’s RegimeSteps To Take
Senior Manager’s RegimeSteps To Take
We Hope You Found It UsefulLee Werrell Chartered FCSI FISMM
Owner of Compliance Consultant
Contact me personally on 020 7097 1434
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