On this blog it often feels like we’re calling out examples of bad practice. So, it makes a refreshing change to highlight a company which is getting it right. With firms still getting to grips with the Senior Managers and Certification Regime, insurance provider GRP, is among the first to truly embrace it.
They announced this month that they have linked SM&CR compliance with people management practices to embed the rules into company culture. By bringing the two together, they say that the regulations can achieve their goal of genuinely transforming culture.
The Senior Managers and Certification Regime was originally introduced in 2016 and extended to solo regulated firms in December 2019. Its aim is simple; to encourage senior managers to take more personal accountability for their business actions and to improve corporate culture.
Like many regulations though, firms will be tempted to see this as a box ticking issue for the compliance department, and nothing else. What GRP is doing, is linking SM&CR to its recruitment practices.
They’ve introduced software with a standalone module which deals solely with SMCR compliance. It allows the firm to allocate responsibilities to managers, show where these responsibilities have been accepted as well as show evidence. It creates an audit trail for regulators and makes it easier for them to stay on top of their data requirements.
It shows the benefit of moving away from old Excel-based HR management towards high tech solutions which include compliance at their core. It allows the company greater oversight and to show that it is not only complying with the letter of the law but also the spirit.
This offers all sorts of benefits…
Firstly it reduces the administrative burden of compliance, but it also instills confidence in employees. One of the biggest fears is that SM&CR will cripple decision making. Managers may be terrified of taking any decision for fear they may be held personally accountable if it goes wrong.
By maintaining a clear audit trail it is easier to show not only who holds which responsibility, but also that each individual did everything they could to carry out their responsibilities. This reduces the fear factor and makes it much easier to satisfy regulators if they do come knocking.
Moreover, measures like this demonstrate that the company is taking its obligations seriously and regulators love this. The FCA has said it will be assessing the culture within a company as a sign of likely non-compliance.
So, from PR, risk, financial and regulatory aspects, SMCR can become an opportunity rather than a burden. It helps businesses go above – as well as beyond the requirements – which has additional benefits to their bottom line performance.
As with any regulation, different companies will take a different approach, but those who are more proactive stand to prosper.