From SMCR to SEAR, how does your firm manage compliance with accountability obligations?

Since the 2008-09 financial crisis, banks have been on shaky ground when it comes to trust. Already on the back foot, their reputations have been further damaged by multiple instances of misconduct from high-profile institutions.  Little wonder, then, that regulators around the world would follow suit with the UK’s Senior Managers and Certification Regime (SMCR) and step up measures to increase regulated firms’ accountability in recent years.

Regulations Around the World

International regimes and regulations similar to SMCR include:

One regime which directly cites SMCR as a source of inspiration is the Central Bank of Ireland (CBI)’s Senior Executive Accountability Regime (SEAR). Similar to SMCR, which was introduced in 2016, SEAR will also provide a framework for instilling or increasing accountability and good governance in regulated firms. Intended to bolster the Central Bank of Ireland’s existing powers to hold individuals to account, SEAR requires that firms “set out clearly and comprehensively where responsibility and decision-making lie”.  In an address on SEAR, CBI Director General of Financial Conduct, Derville Rowland, referenced the success of regimes like SMCR, which “would not have been extended [in 2018] had it not been considered a success, at least by the regulator.”

The Benefits of Accountability

Increasing senior-level accountability has many clear benefits. For example, in a Bank of England survey about SMCR, 94% of respondents said that the regime “had brought about positive changes to behaviours.” More broadly, KPMG says: “Where accountability is clear and cascaded through the organisation to middle management and their direct reports, significant improvement in the culture, transparency and performance will be achieved.” In a recent revision to their internal governance guidelines, the EBA highlighted even further benefits, stating: “identifying, managing and mitigating money laundering and financing of terrorism risk is part of sound internal governance arrangements and credit institutions’ risk management framework.” In short, increased accountability not only rebuilds trust in financial institutions, but also improves performance and supports ongoing efforts to combat financial crime.

Managing Compliance

Practically speaking, complying with accountability obligations goes beyond identifying who holds senior roles. Firms also need to be able to track their responsibilities and have clear and auditable records of approved and non-approved actions. Compliance officers in charge of managing these areas are increasingly turning to digital tools like ComplyPortal’s Senior Management module, which simplifies the process of assigning Senior Management Function responsibilities to individuals. This provides an auditable record of accountability within regulated firms. From a Fitness and Propriety questionnaire to assess whether or not senior employees are “fit and proper” for their roles, to tracking assignment and transfer of individual accountability, all available actions produce clear audit trails to demonstrate ownership of responsibilities, and ensuring your firm is meeting its’ regulatory obligations.

The Compliance Perspective

Portal brings flexibility and ease of assignment to tracking individual roles and responsibilities within a firm, meaning that guesswork has been eliminated. There are lists of responsibilities; they can be assigned and re-assigned as and when people relinquish or take on new roles; and you are left with a complete audit trail of who held which functions and what responsibilities for a given period at your fingertips. No more missing spreadsheets or corrupt data—everything is housed in one place and accessible remotely from anywhere with an internet connection.”  — Graham Levi-Samper, Associate Director at Complyport

Find out more about how the ComplyPortal platform can help firms adapt to new regulatory expectations at:

About ComplyPortal:

First developed in 2011 by compliance professionals for compliance officers, ComplyPortal offers workflow, automation, and several modules to help firms with control and regulatory compliance monitoring.

ComplyPortal simplifies financial services regulatory compliance management on an easy-to-use cloud-based comprehensive compliance platform. It enables compliance officers, risk officers and senior management to keep track of their firm’s regulatory responsibilities and workflows. Our platform includes the following modules, among others:

  • Monitoring: a year-round schedule pre-populated with monitoring questionnaires to ease compliance processes.
  • Registers: lists controlled by the Compliance officer, but easy for staff to view.
  • Risk: map and control risk areas to effectively identify and manage risk for your firm.
  • eKYC solution: perform comprehensive searches, including client identity verification, document authenticity, and more for a comprehensive KYC and AML approach