PRA’s ‘Dear CEO’ letter doubles down on SMCR
12 March 2021
The Prudential Regulation Authority’s ‘Dear CEO’ letters sent out to international banks, insurance firms and UK deposit takers in late December outline a clear message indicating that the Senior Managers and Certification Regime (SMCR) is high on their priority list for 2021.
This year, the PRA look to be prioritising several issues that have been exacerbated by the impact of COVID-19, including:
- Financial resilience
- Operational risk and resilience
- Climate change
- Credit risk
- Competition and new regulation
Underpinning the progress on all of these will be an expectation of strong governance from firms and a commitment to following the PRA SMCR expectations.
There is no doubt that this year will pose significant challenges to many firms. SMCR may have slipped down the list of priorities as focus turns to easing the burden on already strained business and support functions. However, firms governed by the PRA senior managers regime must adopt a structured approach to providing evidence that they have a strong culture of governance and continuous improvement, in line with the Regulators expectations.
The advantages of RegTech
Even before the pandemic, providing sufficient evidence that individual accountability and competency requirements were being met was a huge undertaking. Firms struggled with data capture, record keeping and the everyday monitoring and maintenance of the Regime. In the remote working world of today, people management is faced with even greater challenges. Low morale, lack of supervision and an isolated workforce are all contributing factors to increased conduct risks that financial firms must now contend with. For many firms, this has accelerated the need for flexible software solutions that automate the admin side of SMCR so that they can concentrate on embedding good culture and conduct throughout the business.
Implementing the right software can bring about tangible benefits through time and cost savings, greater visibility, robust audit trails and assured compliance. It can also stimulate more unquantifiable change such as happier employees, better communication, a greater understanding of responsibilities, quicker access to information and more accurate data.
At Ideagen, we provide Individual Accountability and Competency software that helps firms meet the demands of both the FCA and the PRA senior managers regime requirements, raise standards and boost productivity. Our robust system helps implement a systematic and evidential approach to Accountability and Competency, streamline business processes and give Regulators and stakeholders complete assurance that every aspect of people and process regulation is addressed. By bringing together all the tenets of the FCA and PRA’s requirements from SM&CR and the T&C Sourcebook, Pentana Compliance delivers an end-to-end competency management and senior managers and certification regime software solution that meets and exceeds the expectations of the Regulator.
To find out how your organisation can meet the demands of the PRA’s ‘Dear CEO’ letter and ensure its compliance with SMCR, download our latest e-book: A hybrid approach to SMCR.
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