SM&CR – Keeping CEO’s Awake At Night

Taking their cue from the banks regarding employee T&C appears to have backfired on many firms who will be regulated under SM&CR on December 9th this year.

The latest PIMFA CEO Sentiment Survey revealed SM&CR was among the top three regulatory concerns for 40 per cent of chief executives, alongside Mifid II and issues with the Financial Ombudsman Service.

To compound matters “The regulator said many firms were still often unable to explain what a conduct breach looked like in the context of their business and as a result announced it would be upping its supervision of how companies are embedding conduct rules and were meeting their responsibilities under the SMCR” (FT Adviser Aug 5, 2019).

It would appear many of the thousands of firms falling under SM&CR on December 9, 2019, have in this respect taken their cue from the banks that went before them. Having seen little or no material change in the way employee T&C (Training & Competency) is dealt with many have (incorrectly) assumed the regulator isn’t really going to be a “hardass” about employee T&C.

In a recent podcast with myself, Lucy McClements, herself an ex-FCA Regulator, spoke about the need for firms to ensure compliance wasn’t a tick-box exercise and that Senior Managers had taken reasonable steps to ensure employees they delegated with work, were fit and proper to conduct that work.

Clearly, in this context, any Senior Manager should rightly be uncomfortable relying on the annual round of e-learning, tick-box compliance as credible evidence that employees were fit and proper for the tasks delegated them.

The question is, at this late stage, can anything be done to shore up the evidence and give comfort to obviously concerned CEO’s and Senior Managers? The good news is “yes it can” and it comes in the form a virtual purple elephant called Clever Nelly.

Clever Nelly, the multi-award winning Artificial Intelligence from Elephants don’t forget is easily deployed in a new FinServ firm every week because Nelly guarantees that every employee learns and retains what they have been trained and understands how the regulations affect them in their specific role. It is easy and quick to deploy and quickly forms an integral component of your existing control frameworks. It even negates the need for unpopular annual “refresher training”.

Clever Nelly provides independent, best in class evidence that Senior Management has taken reasonable steps to ensure employees delegated work are fit and proper to conduct that work and perfect evidence that in the event that an employee goes rogue, that they did so intentionally and not as a result of any failings on behalf of the employer.

So if you want to put a smile on your CEO’s face rather than a worried frown and win the support of the whole firm by canning the boring and largely pointless and ineffective annual round of compliance e-learning, maybe you should deploy a virtual purple elephant on the team? www.elephantsdontforget.com