Interview with Ruairi Nash, Director, Head of Relationship Management & Solution Engineering (EMEA), StarCompliance

  • Ruairi Nash, Director, Head of Relationship Management & Solution Engineering (EMEA) at StarCompliance

  • 23.05.2022 06:22 pm

How can you overcome the challenges of the FCA’s Senior Managers and Certification Regime?

Ever since the financial crisis in 2008, global regulators have continued to bring in new measures to help strengthen market integrity. In the UK, part of this regulatory wave involved the Senior Managers and Certification Regime (SMCR), which the FCA implemented to hold individuals and managers more accountable for their actions. However, many firms have found it incredibly challenging and burdensome to adhere to the standards set out by the regulator. If they are unable to demonstrate compliance, not only do firms face serious financial penalties, but also operational and personnel risks from ill-equipped senior management.

Financial IT spoke with Ruairi Nash, Director, Head of Relationship Management & Solution Engineering (EMEA) at StarCompliance, a provider of employee compliance software to the global financial services industry, about these challenges, how SMCR processes can be streamlined and the importance of viewing compliance as a business initiative. 

What are the main challenges senior managers and compliance professionals face with SMCR?

Although each firm has its own unique challenges, there are three main areas that senior managers and compliance professionals struggle with when it comes to meeting SMCR requirements. 

The first is dealing with numerous manual processes. For most financial entities in scope, the regulation has been live for over two years. But many are still using manual spreadsheets and processes to maintain control over SMCR, and in a recent Star poll, 64% of respondents said this was their main challenge. What really makes dealing with manual processes so complex is that compliance processes are continually changing, often driven by reforms to the legislation. This makes it impossible for manual workflows to stay up-to-date and remain compliant as regulations change over time. 

The second challenge is making sure that firms have an accurate record of reasonable steps taken when senior managers carry out their roles and responsibilities. Auditing and recordkeeping are particularly important for employees working in high-risk areas of an organisation as the FCA require firms to have a high degree of control over – and rigorous monitoring of – a senior manager’s actions. Without accurate records, firms run the risk of not being able to demonstrate compliance.

The third challenge is ensuring that individuals understand where and how they should show ongoing compliance with SMCR when there are changes in management, roles or responsibilities. We’ve seen this challenge grow significantly as a result of the “Great Resignation” crisis, with firms experiencing significantly higher levels of staff turnover. Reporting protocols likely differ from firm to firm,  but if a new employee isn’t trained correctly with an easy and repeatable process from the start, adherence to regulation may falter.

How can SMCR processes be streamlined?

Technology, with software solutions designed specifically for SMCR, can enable firms to automate manual processes. This makes compliance simpler and less burdensome for both senior manager and compliance officer workflows while creating an accurate and transparent record of reasonable steps taken by senior managers when fulfilling their duties and responsibilities. 

As previously discussed, legislation can change over time, which can make it exceptionally difficult to keep your entire organisation up-to-date with the latest regulatory requirements. A technology partner worth its weight will keep a watchful eye on legislation, adapting its technology as needs and expectations change, enabling firms to be future-ready and close the gaps between their compliance frameworks and new regulation. This helps give compliance officers the certainty that senior managers have met and filed their compliance obligations correctly. The same software can also be used to evidence the training and competence of employees, further de-risking the likelihood of appointing the wrong people to leadership positions, or keeping them on staff.

Why is it important for compliance to be viewed as a business initiative? 

In many organisations, compliance is often siloed from other business functions. This hinders a business’s success, making it difficult to gain holistic visibility into – and awareness of – potential and emerging compliance risks. 

These silos restrict transparency, preventing business functions from acting in concert to meet requirements and limiting the sharing of compliance best practices and behaviours. The siloed approach sends a very clear message to employees across the firm – ‘compliance isn’t part of my job, it’s that department’s job, so why am I being bothered?’ Compliance quickly becomes a burden – an afterthought – to a back-office department, to which they owe no accountability or responsibility. 

Consequently, businesses must change their approach and elevate compliance beyond a departmental silo. Regulatory compliance is more than just a box-checking exercise – it's an opportunity to make compliance a strategic endeavour that strengthens a business and its reputation by becoming part of the organisation’s corporate culture. Not only does this ensure that compliance is a more proactive function within the organisation; it results in positive behaviours and attitudes that are filtered down and emulated organisation-wide. 

By viewing compliance as a business initiative,  employees are given the accountability they crave to take ownership of their actions, demonstrate where they have performed well, and show they are fit and proper to hold the position they do. This creates better leaders who can contribute to building a strong reputation, ensuring a long and prosperous future for the business. 

Other Interviews