With the publication this week of ‘Consultation Paper 16/1: Consequential changes to the Senior Managers Regime’ and ‘Consultation Paper 1/16 Strengthening individual accountability in banking: amendments to notification rules and forms’ by the FCA and PRA respectively, the regulators are proposing rule changes to comply with the proposed removal of section 64B(5) of Financial Services and Markets Act (FSMA).

Section 64B(5) of the FSMA would have required Firms to notify the regulators if they knew or suspected that an individual performing a Senior Management Function had failed to comply with the conduct rules. The requirement remains for Firms to inform the regulators of disciplinary action taken against staff as a result of a breach of the conduct rules.

Feedback on the consultation papers is required by 5 February 2016 (FCA) and 8 February 2016 (PRA), however, the entire consultation is a no brainer, you can’t have rules that refer to legislation that does not exist. This is about the regulators following ‘due process’ and I have no issue with that. The issue for me is that with less than two months to go Firms are expected to implement the Senior Managers Regime (SMR) even though the regulation hasn’t been finalised. For example the policy statement for CP15/22 is still to be published ‘early in 2016’ according to the FCA.

I have heard first hand that Firms are frantically working on SMR but in some cases are struggling to understand exactly what is required by the 7 March 2016. I expect that the necessary policy statements and final rules will be published before the deadline but these moving targets don’t help Firms get ready in time. It may be that the initial implementation of SMR for some Firms will be about being compliant - ticking the regulatory boxes – this is nothing unusual. However, the regulator’s vision for SMR is as an enabler of cultural change - once the dust settles the opportunity for Firms to use SMR to enhance governance, oversight and performance is there for the taking, I hope they do.