Redland’s Compliance Director and Co-Founder, Carl Redfern, was one of the speakers and spoke on ‘The role of RegTech in enforcing the right individual behaviours and enhancing company culture’. Within his speech, Redfern covered the Senior Managers & Certification Regime (SM&CR) and the challenges facing the fund management industry in implementing the regime.
Encouragingly, a straw poll of audience members revealed that 80% of those present had already begun some form of preparation for the introduction of SM&CR. However, Redfern cautioned that commencement in December 2019 is just the start of the journey and that the real heavy lifting comes with ongoing compliance and transition into BAU.
Redfern went on to cite direct feedback and learning from the banking sector, that has been subject to the regime since 2016: .
“The amount of change the other side of the commencement date surprised a lot of firms”
“We’ve [Redland] had clients change their Management Responsibilities Maps 12-15 times in the first 18 months and drafting new Statements of Responsibilities became almost a sport!”
“The implementation date is when the journey just begins. We’ve been on it for 3 years now and we’re still evolving” [a top 5 bank].
“Focus on Senior managers and worry about Certification and Conduct rules later – DONT!”
Redfern went on to say “technology has evolved very rapidly over the last few years. In the broader context, when you look at our expectations of technology, people expect it to help them make their lives easier. But in the commercial world, and the operational processes of many firms, that same sea change hasn’t yet happened to the same degree, but it is coming. Artificial Intelligence, big data and those informed intelligent systems of process automation are increasingly becoming the norm. Resulting in firms and their staff to expect more support from their technology real estate”.
Redfern added, “Failing to comply with regulations has never been a desirable thing. However, SM&CR can end careers, impose punitive fines and cause irreparable harm to a firm’s reputation. RegTech is already able to manage risk, predict behaviour, root out malpractice and flag mistakes to a greater accuracy than people alone have ever been able to before”.
“The complexity, governance risk and accountability that the SM&CR imposes on firms, and the risk to Senior Managers of personal fines and damage to their reputation by not being able to demonstrate the appropriate controls, means that RegTech is the only workable solution”.
More information about the NatWest Trustee and Depositary Services’ Fund Management Conference:
By Redland from Redland Business Solutions
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