The new Senior Managers Regime in Banking

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Back in July 2014, the FCA/PRA published a consultation paper to the industry (CP14/13 & CP 14/14) on the eagerly awaited “New Regulatory Framework for Individuals”.  This has been closely followed by CP14/31 and CP28/14, as both regulators follow up on their initial proposal with further consultation as to how the new regime will work in practice.

If you remember, CP 14/13 and CP 14/14 brought us the concept of the following:-

  • The new Senior Managers Regime
  • The newly created Certification Regime
  • New Conduct Rules to support the above, and
  • Revised Fitness and Propriety Requirements

It is worth noting that firms affected by these proposed changes are:-

  • UK Banks
  • Building Societies
  • Credit Unions
  • PRA Designated Investment firms

Following on from those initial papers, CP 15/9 most recently brought us near final rules and consultation on the presumption of responsibility within the banking sector.

For the purpose of this piece we are going to focus on the newly created “Senior Managers Regime” and will consider the rigour and responsibility that the new regime will bring in terms of training responsibilities and accountabilities within a firm.

Under the FCA prescribed Senior Management Functions and Prescribed Responsibilities it is interesting to note that in the FCA’s list of 11 key areas, the items in respect of training sit 3rd and 4th respectively.

Let’s take a look at what the FCA are expecting from firms and individuals with regards to responsibility and accountability for effective training.

Responsibility for: (a) leading the development of; and (b) monitoring the effective implementation of; policies and procedures for the induction, training and professional development of all the members of the firm’s governing body.

Responsibility for:  monitoring the effective implementation of policies and procedures for the induction, training and professional development of all persons performing designated senior management functions on behalf of the firm other than members of the governing body.

So, what does that actually mean in practice?  From our experience many firms have excellent and very focused induction programmes for new starters within firms.  Coupled with many and varied opportunities for on-going CPD, at many levels within organisations individuals are well catered for.  However, what we see very regularly is that those in either Senior Management or Board Positions are the ones that are offered the least opportunities in terms of training and professional development.

We have observed that there is still within many firms the view that once someone is holding a senior management or board position, their learning journey is complete, and that they are now “too busy” and/or “uninterested in furthering their professional qualifications and industry knowledge.”  However that corporate view is at odds with the individuals that we talk to whose thirst for knowledge and input grows as their career develops.

If not, then I think many firms can expect interesting conversations with the FCA about the importance of nurturing a “training culture”

Let’s hope that over time the new Senior Managers Regime and the training and development needs of those individuals affected will align and individuals will get the development opportunities they deserve.  If not, then I think many firms can expect interesting conversations with the FCA about the importance of nurturing a “training culture” within their organisation where training is seen as the key to a successful career and not an unnecessary cost and interruption.

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About Author

Julia Kirkland

Through our award winning training and consultancy partnership FSTP LLP we hope to become a trusted provider of services to client firms across Financial Services. Specialties: Training and consultancy, project and interim management from regulatory issues through to management development and board services. Chartered Member of the Chartered Institute of Securities & Investment

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