Are you responsible? The widening of the regulatory net and treating customers fairly

butterfly-757960_1920The other week the FCA have formally launched their consultation paper on extending the Senior Manager & Certification Regime (SM&CR) to all firms they regulate.  Up to now, this has only applied to the banking sector.

From summer 2018, this is expected to apply to all FCA authorised firms.

The Purpose

The Senior Manager & Certification Regime is an evolution of the previous Approved Persons process and includes expectations and specific conduct rules. It has been live in the banking sector since March 2016.

This regulation has had the aim of ensuring a high degree of accountability for those in positions of influence, ensuring on an annual basis they are certified and fit to hold those roles.

Impact on all of us

Yet this is not just applicable to those in a Senior Management Function.  It also includes a catch-all for all other staff in non-standard functions.   This includes all the management, wider team and staff as well (with the exception of administrative staff); all employees of the authorised person.

FCA aims:

  • Encourage a culture of staff at all levels taking personal responsibility for their actions.
  • Make sure firms and staff clearly understand and can demonstrate where responsibility lies.

The changes mean there will now be a much wider group of financial services firms requiring compliance and adherence to the FCA Code of Conduct.  We are all impacted. Obviously the businesses moving to the new regime will be, but even those currently covered will have to deal with changes to be introduced as the coverage increases to all FSMA authorised firms.

Code of Conduct Rules

Under the regime, there are some specific standards of behaviour that apply to everyone, with some additional conduct rules for those in a Senior Manager function.


Individual conduct rules:

  1. You must act with integrity.
  2. You must act with due skill, care and diligence.
  3. You must be open and cooperative with the FCA, the PRA and other regulators.
  4. You must pay due regard to the interests of the customers and treat them fairly.
  5. You must observe proper standards of market conduct.

Senior manager rules:

  1. You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively.
  2. You must take responsible steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system.
  3. You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively.
  4. You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice.

Certainly, within the collections and recoveries industry, there is already considerable focus on each of these items today – integrity, skill, care and in particular treating customers fairly.

In this sense, there is no change; we are still expected to operate at a high standard.

There is a key change, however, as all financial services firms are now to be regulated, monitored and backed by sanctions for non-compliance.  The bar to diligently do the right thing, every time, is being raised.

Treating customers fairly

In Collections and Recoveries, we are commonly on the frontline of these situations, often talking with customers in difficult circumstances, trying to help and provide solutions. Treating customers fairly is at the forefront of our thinking and the code provides some examples of what could be considered a breach of standard.  For example:

  • Failing to inform a customer of material information in circumstances where they were aware or ought to be aware of such information, including:
    • Failing to disclose to a customer details of charges or penalties (esp. Investments)
    • Providing inaccurate or inadequate information to a customer about a product or service
    • Failing to process a client’s payment in a timely manner
    • Failing to acknowledge, or seek to resolve, mistakes in dealing with customers.


There are also prescriptive measures to monitor and assess situations of non-compliance.

  • Reviewing the individual circumstances of the case, considering the function where the person works and if there was personal culpability
  • Was the failure against the code of conduct deliberate, or below that deemed reasonable in all circumstances?

The Collections Perspective

Those of us in the collections and recoveries function are already at the sharp end of treating customers fairly and the industry has made great progress solidifying  our approach.  It is in many ways already ahead and embedding the culture needed.

However, this new legislation further widens the regulatory net, heightening the attention and focus on compliance.  It is expected to result in increased disciplinary action for those who do not comply.

All of a sudden all of the good work that has been done becomes more real, with very real-world consequences for non-compliance.   It is critical everyone in our teams is aware of the rules, and continues the good work started.

In some way though, this is also an opportunity.   Rather than generating fear from non-compliance, everyone in financial services with a good customer approach now has the regulator more clearly on side.

Doing the right thing, which is what most of us want to do already, has strong regulatory backing, hopefully opening the door to more positive changes for the Collections and Recoveries process.

Previously published at


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