The Senior Managers Regime (SMR) is a part of UK financial regulations aimed at increasing the personal accountability of senior people in the financial services industry. It came into effect in March 2016 and covers both domestic and international firms with UK operations, and is due to be extended to cover a broader part of the market in late 2019. Almost certainly, similar regulations will be introduced in other geographic locations too in North America and Asia.
According to David McNair Scott, CEO of Trailight, the regime incorporates three elements requiring firms and accountable managers to produce a map of accountability and the governance structure around it, incorporates a reverse burden of proof essentially requiring firms to track decisions, and the requirement for firms to identify and assess the fitness of employees which could cause significant harm to the firm, customers or market. The regulation, in summary, requires identification of who is accountable as well as to assess and insure an understanding of, and compliance with, conduct rules. It also requires reporting of any breaches and the onus is on the firm itself to demonstrate compliance. It’s a tall order and it’s coming to the commodities industry very soon – at least in the UK, while Hong Kong, Singapore and Australia have launched similar initiatives. According to Mr. McNair Scott, when the banks went live in preparation for the regulation, many were not using an automated solution and they ‘ had a nightmare’ dealing with it.
In the coming months, energy and commodity firms will also need to plan for, and tackle this regulation in the UK. Trailight offers an automated solution that ‘helps to derisk’ the business. The software is cloud-based and in partnership with Brady, the solution will be offered tailored to the energy & commodities world via a strategic partnership recently announced. “The bedrock of the Accountability regime is a focus on individual sanction. This means that in any investigation Senior Managers have to provide transparency on their accountabilities and responsibilities and show evidence that they have taken ‘Reasonable Steps’ to meet those accountabilities. Critically the regime goes further into mandating Senior Management responsibility for the Fitness, Proprietary, and competence of key staff and requires companywide attestation, understanding and day to day application of minimum standards of conduct,” says the news release.
Brady is first to market with a white labelled version of the Trailight solution, Libby Koehn, CPO of Brady, told me. “The solution offers an automated solution in the cloud to help meet the requirements of the regulation. Many of our impacted customers know that the regulation is coming but haven’t yet solved the issues related to compliance. The Brady/Trailight solution represents a cost effective and very intuitive way for them to do so. Together, Trailight and Brady are empowering customers to manage risk with innovative products and tools that evolve, as business gets more complex. These pioneering solutions help our customers to stay ahead of the curve. Brady’s Accountability Compliance solution was designed specifically to provide the control, intelligence, data and clarity needed to make informed business decisions and the evidence needed to show that ‘reasonable steps’ have been taken to manage accountability throughout the firm – and to comply with the Senior Management Regime, Certification Regime and Conduct rules“.
This article appeared first on CTRM Center.