Five years ago, on 7 March 2016, the Senior Managers and Certification Regime, the SMCR, came into force - Parliament’s solution to an accountability deficit in the financial services industry following the 2008 banking crisis. The regime focuses on the individual accountability of Senior Managers for the operations of the business but, crucially, HR has a vital role to play in the effective application of the regulations and ensuring legal compliance. So, SMCR is certainly something HR needs to understand. The snag is, in some areas, HR’s knowledge is too general which, as we have seen, has led to problems. So, in short, HR may need upskilling.
To that end, Pinsent Masons has developed a new training product aimed at those clients who have an FCA or PRA regulated business, specifically aimed at HR professionals. It is accessed through a link to a chatbot which assesses the user’s knowledge of SMCR and then, depending on the level of knowledge and understanding, you access a series of training videos which fill the gaps.
So, let’s find out more about it from one of the developer’s, lawyer Anne Sammon:
Anne Sammon: “So, I think it's important, first of all, to say we haven't had anything new come out recently in relation to SMCR. The reason for the product is that over the last 12 months or so we've seen increasing queries come in from HR around SMCR and how it impacts what they do on a day to day basis and we've also seen a couple of issues where things have gone slightly wrong because the individuals dealing with a particular problems, whether that's regulatory references, or onboarding of new staff, haven't quite understood how SMCR connects with what they do on a day to day basis.”
Joe Glavina: “So tell me about that product, Anne.”
Anne Sammon: “So the way that the product works is we have a chatbot on our website that will ask you 13 questions to assess your knowledge of SMCR and at the end of that process it will tell you how many you've got right out of that 13 and if you enter your email address you then get a report from us explaining the questions that you got right and the questions that you got wrong, and what the actual answers to each of those were so that you can kind of help to upskill yourself. Then if you want to fill in some of those gaps in knowledge, we offer a series of training videos and, at the end of the report, it will suggest which training videos might be most appropriate based on the answers that you've given to the chatbot.”
Joe Glavina: “So tell me about the training videos, Anne. Who’s voice do we hear?”
Anne Sammon: “So it's my voice that you hear, Joe, on the training videos, and we've prepared the presentations around the types of queries that we get. So they're intended to be quite practical so that there will be at the start of each kind of general outline of what's the issue, what does SMCR mean in this context, what the FCA rules say, for example, and then we'll talk through some case studies quite often around, okay, so this is what we've seen in practice, these were the issues that arose, this is how to deal with this.”
Joe Glavina: “As I understand it the product is chiefly aimed at the FS sector but we also have some clients outside FS but which have parts of their business that are FCA regulated. Is that right?”
Anne Sammon: “So if you think of the FS sector as being banks, insurers and an investment management firms, hedge funds, those types of what I'd call traditional FS firms, this will be relevant to them, but it's also relevant to anyone that has an FCA regulated business. So you might, for example, be providing some services and have some sort of insurance policy that you offer alongside those, and that insurance policy, part of the business will be FCA regulated and so it will be relevant to that part of the business, and anyone who works in that area.”
Joe Glavina: “You mentioned you’ve seen cases where things have gone slightly wrong, with HR not quite understanding how SMCR connects with what they do on a day to day basis. Can you give me an example?”
Anne Sammon: “So I think a really good example is around the issue of performance management. So, quite often what we see is that firms decide that they're going to performance manage somebody senior because they they're looking at a way of trying to facilitate an exit and they feel that, actually, maybe, the best way to do that is to performance manage the individual. The issue with that is, from a regulatory reference perspective, there is an obligation to include certain details about an individual. So, for example, whether they've got any warnings or disciplinary warnings, whether you've had any concerns about what we refer to as ‘fitness and propriety’ and if you've gone through a kind of performance management process and got to the end of that process and issued a warning that then has to go on the individual's regulatory reference and that can be problematic in terms of that person then finding later employment which can, in turn, mean that they're more likely to fight the issuing of that warning in a way that that you wouldn't necessarily expect if you weren't familiar with the regime. So, one of the things that we often see is that clients get too far down those processes and they've got themselves into a situation with it where they will have to include some information on the regulatory reference, and that's going to be problematic, whereas, if they thought about the regime at the very outset they might have decided to go down a different route for exiting the employee.”
If you are interested in the product, then we suggest you go to the website, access the chatbot, and asses your level of knowledge. If you provide the chatbot with your email address we will follow up by sending a tailored report to you covering your answers, together with a recommendation of the training modules that would best suit your needs. Alternatively, if you have already decided to purchase access to the training videos, please contact your usual Pinsent Masons advisor who will reach out to you with details of the terms and conditions of the product, and the costs, based on your access requirements. We have included a link to the training product in the transcript of this programme.