29 Jan 2018
The United Kingdom has extended its Senior Managers and Certification Regime (SMCR) to the insurance sector, making top insurance executives personally accountable for misconduct at their firms, Treasury said on Monday.
Under the new rules, a code of conduct will be set out for all staff, and workers that have a job where they could “do significant harm to consumers, or to the UK’s financial stability,” will have to be approved.
SMCR, which was first introduced for banks and building societies in 2016, will become effective in the field of insurance from 10 December 2018.
“The extension of the regime to insurance firms will ensure individual accountability for misconduct at the most senior levels within the insurance sector,” said a Treasury statement.
John Glen, Economic Secretary to the Treasury and City Minister, said SMCR ensures that those at the top “display the behaviours and values that the British people expect.”
Regulator the Financial Conduct Authority (FCA) is also consulting on how the regime will apply when it is extended to include smaller firms regulated only by the FCA.
The regime currently applies to banks, building societies, credit unions, investment firms and UK branches of foreign banks.
“The government previously legislated to extend the regime across all financial services firms. The extension into insurance is the start of this,” Treasury said.
SMRC was set up in response to the 2008 financial services crisis and significant conduct failures in the sector. A parliamentary committee recommended that a new accountability framework focused on senior management be established.
Last year the FCA issued a statement about SMCR, a year after its launch in 2016, saying:
“One year on, the FCA has seen firms taking their responsibilities more seriously. But we recognise culture change takes time and there is still more to do. So we will continue to keep a watchful eye on the progress that firms are making.”
“Since the regime was introduced, we have been undertaking work to ensure that senior manager responsibilities are properly allocated and understood in firms. In some cases, we have seen evidence of overlapping or unclear allocation of responsibilities,” it added, “In other cases, firms appear to be sharing responsibility amongst some staff at different levels of management, obscuring who is genuinely responsible.”
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