‘Reasonable steps’ for senior managers

With the onerous Duty of Responsibility being extended to high-level staff right across the financial sector, Gregory Brandman and Ruth Paley review the regulators’ formal guidance as well as best practice principles to help senior personnel manage and mitigate their personal risk.

Gregory Brandman (partner) and Ruth Paley (of counsel) are from the financial services disputes and investigations team at law firm Eversheds Sutherland. Contact them on gregorybrandman@eversheds-sutherland.com and ruthpaley@eversheds-sutherland.com.

The Senior Managers and Certification Regime (SMCR) was introduced for banks and Prudential Regulation Authority-regulated investment firms in March 2016 and further legislation was enacted bringing into effect a new statutory ‘Duty of Responsibility’ for senior managers at those firms with effect from 10 May 2016. The Financial Conduct Authority has recently confirmed that the SMCR (including the Duty of Responsibility) will be extended to insurers and FCA solo-regulated firms from December 2019, a development which will have the effect of applying the SMCR to the whole of the regulated financial services industry in the UK, although the impact of the regime will be tailored by reference to the size and resources of each firm.