The FCA gave an interesting speech this Monday around compliance and the evolving regulatory landscape and expectations. It highlighted how the Senior Managers and Certification Regime (SMCR) has forced firms to allocate and align senior managers’ responsibilities to controls and oversight. This starts with setting the ‘tone from the top’ and making every person engaged and accountable to focus on the ‘tone from within’.
Kaizen sees this on a daily basis. Through our Accuracy Testing and Advanced Reconciliation services, we detect errors and data quality issues. The key question for consideration is whether regulatory reports are being signed off by senior managers under the SMR in the belief that they are accurate or inaccurate with remediation work to fix the problems.
“The focus on points of failure not only encourages greater awareness, it also promotes better calculations of judgement.” Mark Steward, Executive Director of Enforcement and Market Oversight, FCA
Valid but wrong
Kaizen’s quality assurance testing identifies errors and ‘valid but wrong’ scenarios. This supports senior managers in their role and provides them with a level of independent evaluation across their whole dataset instilling confidence in the sign off process, as well as certification that their firm is compliant with their regulatory reporting obligations.
Highlights of the speech:
- SMR changes the way firms allocate responsibilities
- Five Conduct Questions (5CQ), ‘tone from the top’, all persons are personally accountable
- Every employee is subject to conduct rules
- SMR & 5QC requires firms to understand the risk of non-compliance
- Failures are not necessarily due to compliance but consequences of choices.