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Impact of SMCR on staff training policies & requirements

The SMCR itself contains specific rules and staff responsible for the firm’s compliance with the SMCR will require training in those requirements.

The greater training requirement will, however, be driven by the SMCR’s focus on making sure that Senior and Certified managers have done everything they can to ensure that the businesses for which they are responsible is properly run and effectively controlled. The SMCR will drive much wider training to ensure staff are competent to carry out their roles and to bring about cultural change. This will require tailored, role-specific training to all staff who deal with UK clients in either a direct capacity (e.g. Sales) or an indirect capacity (e.g. Operations, including AML Operations).

CONDUCT RULES

The Conduct Rules can be interpreted as driving a training requirement.

SENIOR MANAGER RULE 1

“You must take reasonable step to ensure that the business of the firm for which you are responsible is controlled effectively.”

  • Are the processes for the business you manage accurately mapped out, including processes with other entities within your firm and with third-parties
  • Are your personnel adequately skillful, knowledgeable and trained to do their jobs, both in terms of the processes and controls within the firm and the overall legal and regulatory framework within which the business operates?

SENIOR MANAGER RULE 2

“You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively.”

  • Are delegated responsibilities properly documented and roles and responsibilities fully understood?
  • Are the staff you delegate to adequately skillful, knowledgeable and trained to do their jobs?

PERSONAL RULE 2

“You must act with due skill, care and diligence.”

  • Do you understand your roles and responsibilities properly?
  • Have you been adequately trained to do your job?
  • Do you take time to stay up-to-date and to educate yourself on market changes?
  • Do you have any recognised qualifications in relation to your role?

ANTI-MONEY LAUNDERING (AML) TRAINING

I addition to specific regulations regulators generally expect firms to conduct their AML activities in accordance with best practice as laid down by the Financial Action Task Force (FATF).

FATF Principle 15 says:

“Financial institutions should develop programmes against money laundering and terrorist financing. These programmes should include: a) The development of internal policies, procedures and controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high standards when hiring employees. b) An ongoing employee training programme. c) An audit function to test the system”.

The regulators can be expected to ask the Senior and Certified Managers responsible for a firm’s AML provisions whether they are operating in accordance with FATF and that will include the requirement to have an adequate ongoing staff training programme. AML failures due to inadequately trained staff (including those in low cost locations) are not likely to be tolerated.

CONSISTENTLY GOOD BEHAVIOUR IS KEY

A challenge for large organisations will be to ensure internal consistency of approach in the execution of its activities.  The SMCR is likely to drive a greater regulatory focus on consistently appropriate behaviour across all activities and Senior and Certified Managers should take steps to ensure that both cultural and technical/controls training reinforce this.

WHAT STEPS SHOULD SENIOR MANAGERS TAKE?

  • Understand how an adequate training programme is imperative to satisfy both themselves and the regulators that they have taken reasonable steps to ensure that the functions they are responsible for are fit for purpose and compliant with all relevant laws and regulations.
  • Have a documented Learning and Development Plan for the Senior Manager, Certified Managers reporting to the Senior Manager and staff reporting to the Certified Managers.
  • The firm must certify all Control Function holders as suitably skilled and qualified to do their jobs on an annual basis.
  • Ensure that adequate training is in place for all staff.
  • Recruit suitably skilled staff or ensure they are trained after recruitment.
  • Conduct regular training needs assessments to ensure that staff remain competent to do their jobs as the environment in which they are operating evolves.

HOW LYSIS CAN HELP

  • Training Needs Assessment across most GRC disciplines.
  • Theoretical and practical training for KYC and Client On-Boarding personnel.
  • Wider GRC training and masterclasses in conjunction with Cass Business School.