SMCR Conduct Rules
SMCR Conduct Rules are straightforward, however when it comes to reasonable steps, interpretation can be subjective.
In the UK, the Senior Managers and Certification Regime (SMCR) requires regulated firms to take “reasonable steps” to ensure compliance. This means they must demonstrate proactive efforts to prevent misconduct within their organisation. It involves clearly defining responsibilities and having robust systems in place.
Q1: What are the potential consequences for Senior Managers, directors, or partners in a regulated firm if they are found personally culpable in a breach?
A1: Senior Managers, directors, or partners can face significant personal fines from the FCA if they are found culpable in a breach. This is regardless of the firm’s structure, such as a limited company or partnership, which does not limit their personal liability under the Senior Manager and Certification Regime (SMCR).
Q2: Can the FCA fine both a firm and its individual managers for the same breach?
A2: Yes, the FCA, sometimes along with the PRA, can fine both a firm and individual managers separately for the same breach. This emphasises the importance of personal responsibility in adhering to regulatory standards.
Q3: What was the reason for Mr. Carlos Abarca’s fine from the FCA?
A3: Mr. Carlos Abarca, former CIO of TSB Bank plc., was fined for breaching PRA Senior Manager Conduct Rule 2. He failed to ensure the TSB IT migration was adequately risk assessed, tested, and did not gain appropriate assurances from critical third-party providers.
Q4: What led to the fine and ban imposed on Mr. James Edward Staley?
A4: Mr. James Edward Staley, former CEO of Barclays, was fined and banned for providing misleading information to the FCA regarding his relationship with Mr. Jeffrey Epstein. This was a breach of Individual Conduct Rules (ICR) 1, ICR 3, and SMCR 4.
Q5: How can I ensure compliance to avoid personal fines from the FCA?
A5: To avoid personal fines, it’s crucial to act compliantly, understanding and adhering to regulatory standards and conduct rules. Regularly reviewing and updating compliance practices, and seeking professional advice if necessary, are key steps towards ensuring compliance.