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A View From The Exchange: are senior managers now 100 per cent faithful?

A View From The Exchange: are senior managers now 100% faithful?

    According to the BBC, over 9 million of us tuned in to watch the Traitors finale last Friday night and whilst we're still coming to grips with the fact that the highlight of the TV calendar is already over for the year and we haven't even reached February, we're clutching at straws as to how we can make 9-lives Linda and newly crowned "King Alexander" relevant in the enforcement world. This week's target is the uncloaking of just how successful we think SM&CR has been - has it really been as much of a game changer as the Seer power or is it more of a damp squib akin to a Traitors' finale with no Traitors in it? From an enforcement perspective, we're minded to say it’s the latter. 

    If we focus purely on the numbers and look at actions taken by the FCA since the introduction of SM&CR, the FCA have played it very safe (focussing on breaches of the Individual Conduct Rules rather than the Senior Manager Conduct Rules) and it is yet to take action against a senior manager for breaching Senior Manager Conduct Rules 1-3 (which cover managerial oversight). Plus, neither the FCA nor the PRA have taken any action against a senior manager for breaching the Duty of Responsibility (despite it being in force for over eight years), making it seemingly more irrelevant than Faithful Frankie (as voted by her fellow players). 

    We recently submitted a Freedom of Information Act request to the FCA in order to test our theory further. The response shows that the FCA's current enforcement portfolio (as at 31 October 2024) included only 21 open investigations into senior managers and two open investigations into certified staff members. It also highlights that the FCA only opened one investigation into a senior manager in 2024 (compared to 11 in 2023) – a stark change in approach which has caused heads to turn as eagerly as Linda in episode 1. 

    What about more junior staff members? Since 2019, the statistics reveal that the FCA has only opened (and subsequently closed with no action) one investigation into a Conduct Rules staff member. Maybe it's this group that are the true Faithfuls?

    Whilst many firms will (rightly) say that SM&CR has improved behaviour and created a stronger culture around governance and oversight, including a greater understanding of responsibilities at senior management level, are the FCA getting away with pulling Claudia Winkleman's fringe over our eyes and making us think it's created more Faithfuls than it really has? The reality seems to be that where things have gone wrong at firms, individuals are rarely held accountable by the regulators and the expectation is that firms must police themselves. Senior managers should sleep easy in their beds knowing that there's little risk of them not making it to breakfast, or worse, being banished by their fellow teammates.

     

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