"Extending the SM&CR from PRA regulated companies, [predominantly] banks and building societies, to all FCA regulated companies means a high volume of wealth managers and advisers will fall into scope for the first time.
"The proposals come at a time of unprecedented regulatory change, including MiFID II and the new General Data Protection Regulation. For companies to manage this change effectively it’s paramount not to view any one piece of regulation in isolation. There’s a common theme of accountability, transparency and customer outcomes at the heart of all regulatory change which of course means natural overlaps.
"Companies need to ensure that there is governance oversight at the very top of their organisations so that all regulatory projects are co-ordinated, and managed in line with the company’s commercial development and strategic plans.
“When it comes to the SM&CR, we believe what’s most important is that the requirements are applied proportionately. The FCA has emphasised that this is the approach it will take in today’s announcement, with a core regime for all regulated companies, and an enhanced regime for the largest and most complex organisations. This is important as a large bank for example will have thousands of staff and a multi-layered organisational structure. In smaller firms the organisational structure can be very simple, with a few key people holding all the main management responsibilities.
"In preparation for the changes wealth management and advisory companies should be reviewing their governance structures, committees and identifying those individuals who are material risk takers or who have the potential to cause ‘significant harm’ to the firm or its customers. To satisfy the requirements of SMCR, these structures need to accurately reflect the business activities of the firm and demonstrate where true accountability for these activities lie. Given the multiple regulatory deadlines ahead it is best to start these audits as soon as possible.”
Linda Gibson is a Director and Head of Regulatory Change and Compliance Risk at Pershing, an affiliate of Pershing, a BNY Mellon company. Linda has overall management responsibility for reviewing emerging regulations and working with colleagues and clients to anticipate and advise on the impact and opportunities. Linda joined Pershing in 2009 as head of compliance advisory and moved to her current role in 2014.
Linda has more than 20 years' experience in financial services. Prior to joining Pershing, Linda was head of compliance for Penson Financial Services and before that worked at the FCA where she managed a team responsible for all aspects of ongoing supervision for wholesale firms.