Insight Regulatory Consulting LLP

The Challenge

The FCA views culture in financial services as a key root cause of the major conduct failings that have occurred within the industry in recent history. Strong leadership, in conjunction with the concept of accountability, promotes good culture within firms. If culture is so crucial then it needs to be managed. If it needs to be managed, then it needs to be measured.

The challenge is two-fold: (i) Senior Managers (SMs) need to demonstrate that they are meeting their own regulatory obligations while minimising the administrative burden imposed by the UK Senior Managers and Certification Regime (SMCR), detailing and evidencing the reasonable steps that they undertake, whilst ensuring that the business activities for which they are responsible continue to promote a good culture without compromising profitability; and (ii) Measuring the conduct and culture of your firm to ensure that the behaviours and accountability of employees support the firm’s values, is crucial to developing an effective conduct risk strategy.

The Solution

Insight have a two-pronged approach that assists SMs in meeting the challenges that they face:

Insight-Cerberus (app based SMCR solution): A simple and intuitive solution to SMCR which has been specifically designed to help SMs demonstrate and evidence that they are meeting their obligations on an on-going basis, specifically:
1. Governance – Cerberus allows SMs to demonstrate the effectiveness of their governance arrangements. It allows the easy management of the firm’s governance hierarchy and committee memberships on a real-time basis;
2. Allocation of responsibilities – Cerberus allows firms to see any gaps in responsibilities at a glance, manage changes in responsibilities on a real-time basis and evidence the exact responsibilities that have been allocated and accepted by SMs, removing any ambiguity for both the SM and the firm;
3. Reasonable steps – Managing the detail, timing and evidencing of reasonable steps is a major administrative burden for SMs. Cerberus manages this process, diarising and prompting when steps are overdue and requiring evidence to demonstrate that the steps have been adequately closed allowing SMs to get on with managing their other business activities;
4. Delegation and oversight – Whilst accountability cannot be delegated, SMs must practically rely on other team members to undertake steps on their behalf. Being able to oversee that the steps have been undertaken appropriately and being notified when they haven’t, is key to effective management and oversight; and
5. Certification – Cerberus manages the entire certification process, requiring employees to complete a fit and proper checklist, senior managers to certify the employee, issuing a certificate and alerting when the certification has expired.

C-CAT (a conduct and culture assessment/diagnostic tool): a unique confidence-based tool which takes a quantitative and qualitative approach in identifying the knowledge, skills, attitudes and behaviours that help or hinder a positive culture around conduct which provides a comprehensive analysis and assessment of where your firm’s culture is.

C-CAT uses data-driven insights into culture and conduct gaps to analyse, prioritise and target the areas where change is needed, as well as providing a heat map which identifies, prioritises and targets development by providing detailed measurements regarding:

the regulatory and conduct knowledge of employees;
how employees believe they are best representing the firm;
the level of accountability and responsibility of employees;
how employees manage a challenging situation; and
employees’ approach to working with clients.

Underpinning each of these 5 factors are a series of competencies allowing SMs to develop the right conduct risk strategy for their organisations.

The Importance

Adequately demonstrating that ongoing obligations are being met and that reasonable steps are being undertaken is essential to addressing the ongoing liabilities of SMs.

SMs must promote and develop a robust conduct risk strategy for the business activities for which they are ultimately accountable. That strategy must be purposeful and effective and therefore based on actual issues as opposed to perceived ones, using outward looking factors as opposed to solely relying on internal metrics such as breaches of personal account dealing rules or failing to complete training on a timely basis.

Next steps

If you are an SM struggling under the administrative burden of SMCR contact one of our partners to arrange a demo or a free trial of Insight-Cerberus:

Lesley Kumar
lesley.kumar@insight-regulatory.com
+44 (0)7786 176527

Palvinder Gill
palvinder.gill@insight-regulatory.com
+44 (0)7811 371884

If you are a SM who wants to understand where the conduct and culture of your organisation currently sits, contact us to learn how C-CAT can give you the metrics that you need:

[email protected]