< Features | 11.07.2019 |



The FCA reveals what it expects from the insurance profession

The UK Financial Conduct Authority (FCA) has told insurance professionals to deliver “a change in culture” to meet regulatory requirements. At the British Insurance Brokers Association (BIBA) annual conference in May, the trade body’s head of compliance and training, David Sparkes, pointed out the insurance sector’s frustrations with the senior manager and certification regime.

When discussing the Senior Managers and Certification Regime (SMCR) – which came into force for all insurance and reinsurance firms regulated by the FCA and Prudential Regulation Authority on 10 December 2018 and will come into force for solo-regulated firms on 9 December 2019 – Mr Sparkes questioned whether, for one-man band insurance brokers, the SMCR meant they were now having to waste their time in creating a ridiculous document stating, “I am responsible for everything.”

Since the end of 2018, senior managers at insurers, reinsurers, the Society of Lloyd’s and managing agents have needed to have a ‘statement of responsibilities’ that clearly states what they are responsible and accountable for.

But in response to Mr Sparkes’ question Karina McTeague, director of general insurance and conduct specialists at the FCA, said the new regulatory requirements for the profession should be seen as an opportunity rather than just more red tape to deal with.

Ms McTeague said: “My wish is the insurance sector takes a step change with the senior managers and certification regime.”


As well as forcing insurance provider and broker bosses to have clearly defined responsibilities, the SMCR aims to make sure firms clearly understand and can demonstrate where responsibility lies across the business.

Ms McTeague said it will “embed a healthy culture” in the insurance profession.

She said the insurance profession needs to do several things to satisfy the City watchdog and meet the requirements of the SMCR. Insurers, reinsurers and brokers must:

  1. Set the tone of the business from the top by having a clearly articulated purpose.
  2. Make sure the words match the actions taken by those working in the business.
  3. Bosses should encourage and reward behaviours they want to see rather than incentivise the sale of a particular product, in a bid to avoid a repeat of the payment protection insurance mis-selling scandal.
  4. Create a working environment that encourages people to speak up because employees should be guardians of the values of the company they work for.
  5. Create a culture where those who speak out are listened to and action is taken because speaking up only works if there is listening in response.

She claimed, while there was some initial resistance when the senior managers and certification regime was first introduced to the banking sector several years ago, the FCA has had feedback from board members stating they appreciate having greater clarity of their responsibilities.

Ms McTeague said: “This clarity isn’t just about regulatory requirements. It is about better business. Don’t treat this [the SMCR] as a project. Think beyond the implementation date and regularly get together everyone in your business who is going to make this business as usual.

“This is about setting base standards. Everyone needs to know what these standards are.”

Emma Ann Hughes is communications director of the CII


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