How is UK Financial Compliance Changing?


Financial compliance in the UK may not be one of the first industries consumers and even industry professionals think of first. However, in the last decade there have been sweeping sets of rules and regulation across the industry and even more so since the 2007-8 Financial Crash in the UK and around the world. Most recently in the UK, the Senior Managers and Certification Regime (more information), more-commonly known as ‘SMCR’ or ‘SM&CR’ has been coming in and big changes are afoot.  

The Financial Conduct Authority (FCA) have come to the conclusion in recent times that not only to consumers need to be better protected in the world of financial products, money lending and financial advice, but that the whole issue of and culture around financial compliance needs to drastically change and for the better.

Unpicking the Blame Culture

Hence, this new regime is starting to unpick the previous ‘blame culture’ that has been left festering for too long in the financial services industry. Thus, the process whereby a Financial Compliance Manager or other senior member of a company can be blamed and held accountable for everything that occurs in a company is coming to an end.

In past times, should there be a breach or any legislative and compliance-related issues and errors, the compliance manager was the person who was to deal with it. however, with these managers being very disconnected form the decision making of the company in question and not having a true connection or relationship with the customers and those being advised, it hasn’t really been a fairly managed system.

This new SMCR regime however is starting to change that. Rather than being able to pass the buck and defer to a manager or compliance professional, each and every individual in qualifying companies will need to undergo an accepted level of training under the regime. This means that everyone necessary will truly understand who is accountable for what and although there may well still be a degree of oversight, there will be far more personal responsibility too, which can surely only be a good thing.

Types of Firms Qualifying for SMCR in the UK

Ultimately, any company offering financial products and/ or advice will for the most part qualify for this regime and will therefore be held to account under its rules and terms. There are many companies which have known about this for quite some time and thus, they have and are continuing to make the necessary adjustments to their businesses and how they run.

However, there are also many people and companies who although FCA Regulated in the UK, do not even realise that they fall under the scope of the SMCR regime. The FCA and various companies in the industry and trying to educate those across finance so that no one is left behind, but this is expectedly, harder than may have been thought in the first place.

Although the likes of mortgage brokers and other financial intermediaries have been on top of their obligations under SMCR, there are others who offer consumer credit even including the likes of dentists and denture providers who offer credit, finance and similar (find out more), and are not fully aware if at all of their obligations. Hence, the FCA have been undertaking a ‘soft’ roll out of this scheme but in the coming 12 months there will be greater push from the regulators for more people in the industry and qualifying for SMCR to address their requirements under SMCR.

Are UK Banks Subject to SMCR?

Although many may believe they are, UK banks are not subject to the same regulations and the other companies qualifying for SMCR. UK banks are covered by a similar but ultimately different and more tailored set of regulatory requirements, the Senior Managers Regime (SMR) which covers the specific needs and requirements of banks as well as their clients and customers.