finances, money

The number of senior managers in financial services firms could be held personally responsible for mis-conduct has rocketed to 72,000, according to new research from law firm Cleveland & Co.

The news comes after the Financial Conduct Authority (FCA) confirmed that last month it would widen the reach of the Senior Managers and Certification Regime SMCR from covering just the banks to the whole of the financial services industry, in a new effort to increase accountability.

The 20-fold increase, from 3,000 in 2016 to 72,000 in 2018, will be due to the extension of the Senior Managers and Certification Regime (SMCR) to all FCA-regulated firms, according to data provided by law firm Cleveland & Co.

The SMCR makes it a criminal offence for senior managers to take a decision with causes their institution to fail, as long as they were aware of the risk of this happening and their conduct fell significantly beyond what is expected.

Whereas previously the SMCR, which is used to increase accountability across financial services staff, covered only banks, building societies, credit unions and PRA-designated investment firms, it will apply to all senior staff at FCA-authorised companies, including financial advisers, private equity firms and fund managers.

If steps are not taken to avoid misconduct, managers could face fines, suspensions and bans.

Firms that will come under the remit of the regime will have to overhaul compliance teams and commit further resources to training their staff on SMCR requirements, a process expected to be more challenging for smaller entities.

Emma Cleveland, managing director of Cleveland & Co, said the scale of the increase highlights the size of the task that many companies face.

‘While the biggest companies with larger budgets should be able to handle the regulatory changes, it is smaller companies with the biggest mountain to climb.

‘Understanding the rules and rolling out extra training – not just for senior staff – will take large chunks out of comparatively smaller budgets.

‘It’s imperative that firms don’t leave introducing changes until the last minute and seek advice sooner rather than later.’





Rebecca joined the HRreview editorial team in January 2016. After graduating from the University of Sheffield Hallam in 2013 with a BA in English Literature, Rebecca has spent five years working in print and online journalism in Manchester and London. In the past she has been part of the editorial teams at Sleeper and Dezeen and has founded her own arts collective.