I have read a lot from the FCA about SMCR and culture change, this worries me as I’m not sure what my firm’s culture is now, let alone how I might need to change it in order to comply with SMCR.
Let’s start with what the FCA state as the purpose of SMCR:
“The SMCR is part of the UK regulators’ drive to improve culture, governance and accountability within financial services firms. It aims to deter misconduct by improving individual accountability and awareness of conduct issues across firms.”
What you can see from this is that the FCA is using the term “culture” in quite a specific way within SMCR. It seems to me that this can be summed up as:
Improving top-down control – governance, senior manager responsibilities, clear reporting lines etc
Having clearer individual accountability at all levels – holding individuals to account for their actions and behaviour whilst they carry out their work.
In essence, improving culture within SMCR is mostly about deterring misconduct. Nobody wants a repeat of 2008.
Our recommendation
So what does this mean for you as a firm needing a practical route to complying with SMCR? Should you be investing in a culture change programme? Should you be employing specialist organisational behaviour consultants?
Our view is straightforward – don’t get too distracted by the idea of culture and culture change. Instead focus on the nuts and bolts of the requirements of SMCR and have a clear plan for implementing all layers of the regime – senior managers, certification, conduct rules, breaches, regulatory references.
You and your firm will be safe if you have implemented the detail well and haven’t left any gaps or vulnerabilities in your SMCR operation. Your firm’s culture may or may not be changed by this process, if it is then this is simply a by-product of implementing SMCR well, if it isn’t then you were probably doing things well already.
(If you do have an interest in measuring your firm’s culture in more detail have a look at this TRC Bitesize “How to measure culture”).