Today sees the publication of a “culture survey” carried out by Lloyd’s of London following reports of widespread harassment and bullying. The insurance market is already preparing a number of changes to try to end what has been described as a “toxic culture”, with reports this weekend suggesting they are gearing up to launch new standards of conduct (which could then be used to impose bans and fines) and an internal market campaign encouraging people to speak out when they encounter bullying, as well as forming an independent advisory group to ensure accountability for the culture overhaul.
All of this comes in the wake of the beginning of the Senior Managers and Certification Regime being applied to insurers in December 2018, which gave affected firms (all those regulated by both the FCA and PRA) 12 months to train all of their staff on Conduct. Andrew Bailey at the FCA has repeatedly highlighted Conduct as an area of focus this year, and with regulators looking closely and public scrutiny at a high, firms across all of Financial Services which will have SM&CR applied to them from December 2019 will need to seriously consider their approach. SM&CR requires all staff to be trained within 12 months of the regimes coming into effect on a firm, but it requires Senior Management Function holders and Certified Function holders to be trained on Conduct prior to that date.
Previously people have often thought of an organisation’s culture as being something that senior leaders in a business set, with everyone else following. In recent years I think we’ve seen a move towards an understanding that everyone in a business contributes to and influences the culture in all directions – so while some will point to the Lloyd’s of London story as proof that SM&CR is not yet working, others will say that SM&CR rules and training have enabled the beginning of a very necessary change which is about to begin. The five conduct rules at the core of SM&CR require that staff “act with integrity”, “act with due care, skill and diligence”, are “open and cooperative” with regulators, that they “pay due regard to the interest of customers and treat them fairly” and that they “observe proper standards of market conduct”, and firms under SM&CR are required to train staff on the specifics of how those rules apply to their role.
If your firm will be under SM&CR from December and you are concerned about meeting requirements, Kind Consultancy can connect you to Compliance professionals with Conduct expertise who can train staff and shepherd your organisation through the adoption of SM&CR. For a confidential conversation contact me on email@example.com or 01216432100.