With just over one month to go to the day when the Senior Managers and Certification Regime comes into force for the whole of the UK's financial sector, preparations at 'solo-regulated' firms should be well underway. The evidence, however, suggests otherwise.

'Solo-regulated' firms are firms regulated solely by the Financial Conduct Authority. The law firm of Baker McKenzie notes: "This category of firms includes UK authorised fund managers (e.g. AIFMs and UCITS Management Companies), UK sub-managers providing portfolio management services to a US or overseas investment manager and UK firms providing single managed account services. One of the few categories of firm that will remain outside of this broad scope are firms that are active in the asset management sector but that simply function as Appointed Representatives for other, licensed, entities."

Juan Diego Martin, the chief operating officer of Fonetic and a contributor to our web-pages, told Compliance Matters: "Given the amount of time that banks have had to prepare, one would assume that the ‘one month to go’ mark for the SM&CR should pass by relatively unnoticed. However, figures would suggest otherwise. In 2018, there was a 70% rise in FCA lifetime bans, compared with 2017. At the same time, the number of FCA investigations into individuals is increasing, as is the number of complaints to the Financial Ombudsman Service – suggesting that consumer concerns are far from eradicated.

"It seems that many of the firms theoretically subject to the SM&CR at this stage are still falling short. As a result, when the rules come into full force, we could see the regulator doubling down on any firms dragging their feet with SM&CR compliance.

"For those behind on preparations, all is not lost. There are some relatively straightforward steps that managers can take to ensure they have nothing to fear when the regulator comes knocking. The key is ensuring that the correct systems are in place to allow senior managers to trace, monitor and audit their employee’s activities and actions."

Experts - especially those on the other side of the English Channel - have long regarded the SM&CR as a typical British 'gold plating' exercise that goes beyond the measures that the country needs to take to satisfy global or regional standards regarding individual accountability in financial services. Others see it as a healthy sign that the UK is not yet ready to take all of its marching orders from abroad.

For our recent coverage of the subject, look here and here and here and here and here.