Our industry has seen a decade of significant change.

In the initial aftermath of the financial crisis, priority was given to restoring balance sheets and strengthening the capital and liquidity standards to which banking institutions are held. The result? Firms now hold ten times more of the highest quality capital and twice as many liquid assets that can be used to raise cash in a time of stress. Firms are also subject to range of other measures designed to ensure that they are now in a far stronger position to survive a severe financial crisis than a decade ago

Going hand in hand with these reforms were proposals to improve governance processes and culture, and to ensure the better alignment of remuneration policies with risk management considerations.

The most impactful of these changes was the introduction of the Senior Managers and Certification Regime (SMCR). Its objective; to ensure that individual senior managers within banks are clearly and unambiguously accountable for their actions. 

Three years on from the regime's introduction we, and our members, believed it was time to take a look at whether it has met its objectives, especially as the regime is being extended from banks and insurers to all regulated financial services firms by the end of the year. We were also keen to identify any learnings we could share and even recommendations we could make to the authorities about how the SMCR could be made more effective and at the same time more useable and proportionate.

Working with our partners Ashurst we had a great response to our survey, from large and small member firms alike, from the control functions as well as from people who are themselves senior managers.  And what it revealed is that we have a population of senior managers that have a clear understanding of what it means to be a senior manager and how they could be held accountable. 

But there were some more critical views too, suggesting that the changes have created too much complexity and engendered a focus on recording decisions and actions, rather than looking at culture more holistically.  

The recommendations within our report represent a tangible opportunity to address these issues and improve the regime, whilst still holding fast to its original objectives of improving accountability. It will be through policy makers and industry working together that the objectives of this regime can continue to be achieved, and we look forward to doing so long into the future.