IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME 1 IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME

IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME 1 IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME

2 IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME THE SENIOR MANAGERS AND CERTIFICATION REGIME (SM&CR) AIMS TO REDUCE HARM TO CONSUMERS, PREVENT BUSINESSES FROM FAILING AND STRENGTHEN MARKET INTEGRITY. The FCA proposes to achieve this by making senior individuals truly accountable for the business areas and management functions they are responsible for. In addition, the regime will help to improve conduct at all levels throughout an organisation. This puts increased emphasis on senior executives to ensure that their decision-making is logical, well-intentioned and clearly evidenced. For some firms, this may be viewed as another regulatory initiative at a time when execution risk is a real factor given the extent of regulatory change across financial services. However, based on our in-depth support given to banking clients during the initia roll out of the Senior Managers Regime (SMR), it is clear that there are tangible operational and commercial benefits to be gained from the successful implementation of the regime.

IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME 3 HOW CAN HUNTSWOOD HELP Huntswood s tailored SM&CR readiness review is well positioned to support you in this transition. This review encompasses three key areas that will help ensure your firm is fully prepared to implement the new regime for the long-term and supports you in deriving the associated benefits. This can form part of an end-to-end managed programme or support in discrete elements.

4 IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME CURRENT STATE ANALYSIS AND PROGRAMME DESIGN To ensure a tailored and proportionate programme of support can be developed, we will begin by undertaking a focused review of your firm s current state and business model. This will include an analysis of the following areas: Organisational structure and the role and make-up of individual committees Governance arrangements and appropriate alignment with your firm s operating model (both pre and postimplementation) Allocation and oversight of responsibilities (including Responsibility Maps and Statements of Responsibility) Distribution and content of management information (MI) and board reporting FOLLOWING COMPLETION OF THIS ANALYSIS, WE WILL DEVELOP A TAILORED PROJECT PLAN FOCUSED ON THE FOLLOWING KEY AREAS: Identifying Senior Manager Functions (SMFs) who have ultimate responsibility for prescribed areas of the business or identified activities, functions or areas Putting in place a regime whereby the firm certifies specific individuals who have the potential to cause significant harm to customers or the firm, and ensures they are competent to perform their role on an ongoing basis Ensuring that all staff understand their respective roles in delivering fair outcomes to customers and in avoiding conducting market abuse Understanding which individuals at the very top of the organisation have ultimate responsibility for certain prescribed and other activities, and articulating how these responsibilities translate to overall statements of responsibilities for the firm and individuals Understanding whether the above can be achieved within the current operating / organisational model and policy framework and, if not, considering how best to execute firm-wide change to deliver this

IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME 5 CHANGE DELIVERY EMBEDDING CHANGE WITHIN YOUR FIRM Our SM&CR experts will execute the actions and activities set out within the agreed implementation project plan. This activity will incorporate the broad spectrum of SM&CR compliance, namely: Development of accurate statements and maps Appropriate design and roll-out of conduct rules and training Embedding effective governance Core HR tasks This will include engaging relevant stakeholders and facilitating governance workshops. This will put firms in the optimal position to be able to implement SM&CR successfully, both initially and on an ongoing basis. In order to provide senior management with sufficient awareness of the implications of the new regime, we will prepare and deliver a tailored workshop that will break down the core elements of SM&CR. Our workshops run to the following structure: Allocation and mapping of responsibilities Demonstrating good governance Defining reasonable steps Defining material risk takers Annual certification Conduct rules training Regulatory references, reporting breaches and whistleblowing Within each of these areas, we will set out the risks and potential changes that all firms need to consider, and using industry case studies and insight detail what this means for firms in practice. Our workshops will enable senior management teams to take a holistic view of their own accountability culture and governance structure, and enable them to gain a deep understanding of what is required to ensure successful implementation of the regime.

6 IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME BENEFITS OF EFFECTIVE IMPLEMENTATION GAIN ASSURANCE OVER YOUR FIRM S FUTURE APPROACH Assure senior management that your policies and procedures are meeting regulatory requirements, which is particularly important as those at the top will be held accountable for any regulatory breaches in their departments.

IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME 7 ACHIEVE COST SAVINGS THROUGH INCREASED EFFICIENCY By defining responsibilities, clarifying accountabilities and re-assessing processes with a streamlined system of governance and accountability, this can support in driving cost savings through increased efficiencies and increasing the transparency and understanding of the division of responsibility within the business. MITIGATE REGULATORY AND REPUTATIONAL RISK By recognising areas of non-compliance early, prioritising them effectively and putting in place a robust implementation plan to mitigate the risks, firms will be well placed to avoid regulatory breaches and any associated reputational damage and financial loss.

8 IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME WHY HUNTSWOOD ESTABLISHED AND PROVEN APPROACH TO SUPPORTING FIRMS IN THIS AREA We have worked with a number of organisations in the banking and insurance sectors, helping them implement the SMR. Our established and proven approach incorporates best practice and industry knowledge ensuring that we are able support your firm in implementing SM&CR effectively. DETAILED KNOWLEDGE OF THE SM&CR REGIME We understand the new regime in detail and are ideally placed to help you interpret and implement the requirements within your firm. Based on our extensive experience in this area, our recently published white paper Implementing the Senior Managers and Certification Regime: Practical guidance for the industry outlines the steps required for a firm to implement the regime effectively. TAILORED SOLUTION We understand that you may have already started implementing SM&CR and therefore might not require support on all aspects of preparing for the new regime. Our flexibility means that, depending on your firm s specific needs, you can simply choose the elements that would most benefit your firm.

IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME 9 MATTHEW FREEMAN SENIOR CONSULTANT

10 IMPLEMENTING THE SENIOR MANAGERS AND CERTIFICATION REGIME Huntswood CTC Ltd, Abbey Gardens, Abbey Street, Reading, Berkshire RG1 3BA Telephone: 0333 321 7811 enquiries@huntswood.com huntswood.com @Huntswood Search Huntswood