Governance, SMCR & Consumer Duty Enforcement

With the July 2023 deadline fast approaching for the Financial Conduct Authority’s (FCA) Consumer Duty, Senior Managers at firms need to be aware of their obligations and anticipate potential increased enforcement actions against them. To minimise their liabilities, Senior Managers should take specific steps, and Danos Consulting can assist in this process.

According to the Code of Conduct (COCON), Senior Managers must take reasonable measures to ensure that the firm’s business, for which they are responsible, is effectively controlled and complies with the relevant regulatory requirements and standards. The introduction of the new Consumer Duty Individual Conduct Rule 6, particularly COCON 2.1.6, will further elevate the compliance standards, mandating Senior Managers to act in the best interest of retail customers.

COCON aims to hold Approved Persons accountable for the overall mismanagement of authorised firms, applying to both individual and collective senior management. It extends beyond their direct responsibilities outlined in their Statement of Responsibilities

Senior Managers with governing functions will likely need to go beyond these requirements to demonstrate:

• They have an objectively reasonable basis to believe that other Senior Managers within the firm are capable of and are actually running their respective sections in a compliant manner.
• They have taken steps to be well-informed about the firm’s business and have actively challenged any misconduct.

Senior Managers should adopt a proactive approach in fulfilling their general duties of governance and oversight. Rule 6, in particular, necessitates that Senior Managers can provide evidence showing:

• They have reasonable grounds to believe that all areas of the firm are effectively controlled and aligned with regulatory requirements.
• If any deficiencies exist, they have taken reasonable actions to address and rectify them.

How Can Danos Consulting Help?

Danos Consulting is a specialised resourcing and consultancy firm serving leading organisations in the Financial Services sector. We have a strong track record of delivering flexible compliance solutions. Our services range from providing resources to support project delivery to conducting impact assessments that identify key gaps and implementing comprehensive actions to ensure regulatory compliance. If you would like to explore this further, please contact Jamie, who will provide expert advice and guide you in selecting the right solutions to meet your regulatory responsibilities.

Jamie Anderson, Principal Consultant, Danos Consulting.
E: janderson@danosconsulting.com