FCA Update – SM&CR and Coronavirus
As the world responds to the coronavirus, almost every part of the financial market is being stress tested like never before.
With market swings that have eclipsed even the last financial crisis and the largest ever number of people working from home, business continuity processes have found themselves front and centre. It is clear from the ongoing functioning of financial markets that the vast amounts of time and money that have been spent by financial firms on ensuring resilience to almost any disaster that these resources have been well spent.
With so much to consider, it would be easy to forget the work that the FCA and PRA has specifically done in the UK to ensure that this is the case. Within the Senior Managers Regime it is SMF24 that is focused on operational resilience, and it is unusual in that it was introduced after the regime was initially implemented for the banks. What is also unusual about SMF24 from the many customers that we at Trailight have implemented, is that it is the Senior Manager Function which is most often split between managers. The most likely set up is for responsibility to be shared between the CTO and COO, and clearly there is also a great deal of delegation of specific tasks that are a result of this.
The importance of this SMF in the current climate cannot be underestimated, and the FCA has specifically updated the market on its impact of the coronavirus situation:
“We do not require firms to have a single senior manager responsible for their coronavirus response. Firms should allocate these responsibilities in the way which best enables them to manage the risks they face. There are existing responsibilities specified in the Senior Managers Regime (SMR), for example SMF24 for operational resilience and SMF2 for financial resilience. Firms should have regard to our statement on key workers on 20 March and our recommendation that the SMF1, or most relevant member of the senior management team, be responsible for their approach to key workers.”
FCA information for firms on coronavirus (Covid-19) response, last updated: 26/03/2020
There is no doubt that the FCA will have a specific interest in SMF24 post the coronavirus crisis. We are living through a truly historical situation that will have tested institutions like nothing before and as such the data that results will provide some unique insights into the internal workings of financial firms. However, unless providing evidence for your reasonable steps is absolutely embedded into your day to day management workflows this may not be front and centre for most senior managers right now. Anyone still managing their Senior Manager Functions with spreadsheets and shared drives will have some serious back-filling to do post coronavirus crisis.
This is an area that we at Trailight are extremely proud of, with our Individual Accountability Regime solution ensuring that our customers get the right level of workflow automation, and that all documentation is systemised and stored as a single record of truth. Our ability to keep senior managers updated of important delegations and handovers via automated email ensures that the solution is light touch and remains as in-obtrusive as possible, freeing them up to focus on the day job of running their firm.