Promoting Excellence in Corporate Governance

The UK Senior Managers and Certification Regime

Forensic & Litigation Consulting | Financial Institutions

June 3, 2016

London Street Bus

Our governance experts helped the leadership team of a Middle-Eastern bank to navigate the myriad of challenges posed by the new Senior Managers and Certification Regime in the UK.

The new Senior Managers and Certification Regime (‘SMCR’ or ‘the Regime’) came into force in the UK in March 2016, with the aim of promoting and embedding the notion of personal accountability among senior management. As a consequence of the Regime, it is expected that

boards of directors and senior management will drive changes in the firms’ culture and promote accountability across all levels of the organisation.

Ahead of the implementation, it was critical for every company in scope of the Regime to review their existing risk management, corporate governance, HR and training arrangements and make the necessary changes to ensure full compliance with the new requirements.

Our Governance, Risk and Regulation team was approached by a Middle Eastern bank with operations in the UK, whose senior leadership sought advice on all aspects of the new regulatory requirements and requested an independent review of their policies and procedures, processes and governance arrangements.

As for many firms, the implementation of the SMCR was not straightforward for this client. The UK-based leadership team relied heavily on the overseas head office’s processes and their policies, and it was necessary to determine their relevance in accordance with the new regulatory requirements (since the Regime only applies to activities conducted in the UK or in relation to UK customers). In addition, the client was keen to educate their senior management team abroad about the implications of the Regime. They required advice not only on how it might affect their UK operations, but also the impact on, and responsibilities of, their senior executives based overseas who have significant responsibilities within the UK.

The client was particularly keen that we helped them find pragmatic and cost effective ways of meeting their SMCR obligations, using as much of their existing business documentation, implement and communicate back to their group senior management.

In order to help them achieve these goals within the prescribed timeframe, our team of experts led a series of activities, including:

  • developing a clear project plan to help effectively employ the client’s resources and ensure full and continuous engagement with their group leadership
  • an analysis, review and enhancement of existing documentation to ensure that it meets the regulatory requirements of the new Regime
  • a review of existing governance arrangements, on both the Group and UK level, to enhance internal corporate governance structures and provide support for senior managers in execution of their responsibilities
  • leading workshops to collaboratively design a pragmatic solution with minimal disruption to the business
  • helping the firm create Management Responsibilities Maps and Statements of Responsibilities for senior managers
  • mapping the existing ‘Control Function’ holders into new designations for ‘Grandfathering’ purposes
  • supporting the re-alignment of responsibilities between the Group and local Compliance functions
  • providing advice on and support to education programmes for both the Group and the UK office to ensure the successful embedding and maintenance of the Regime
  • advising on the design of the Conduct Rules Framework, recruitment, training requirements and performance management processes (including regulatory references and criminal records checks)

While we were implementing these changes, the bank was faced with a number of complications, including resignations of key individuals. We supported the bank through these problems and worked with the senior management team to ensure that all the regulatory requirements were implemented smoothly and on time.

Outcome: As a result of our work with the bank, it successfully met the regulatory deadlines for the full implementation of the SMCR.

Our review of their internal governance arrangements and structures enabled the local leadership team to comply fully with the new regulations. Their overseas senior management and Group Board also fully met, and understood, their responsibilities.


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