Once the legislation was explained to brokers the majority agreed that senior individuals at their firms should be made directly accountable for their actions
Nearly half of brokers are not aware of the impending introduction of Senior Management and Certification Regime (SMCR).
This was the finding from Ecclesiastical’s survey of 250 brokers, it found that 56% of brokers were aware of the changes.
Brokers that worked for a national brokerage were significantly less aware (27%) as opposed to provincial brokers (64%).
Only 4% of brokers said that they were aware of everything the needed to do ahead of implementing SMCR, compared to a third who had no knowledge at all.
Adrian Saunders, commercial director at Ecclesiastical Insurance, said: “Our research shows that unfortunately a large number of brokers aren’t aware of the SMCR and what they need to do to get ready.”
The new rules come into play in six weeks’ time on 9 December and has been extended to all insurance intermediaries and solo-regulated firms just one year after the rules came into effect for insurers.
The legislation was originally introduced in the wake of the 2018 financial crash as a way to encourage a culture of greater responsibility among senior staff and ensure that staff understand and demonstrate where responsibility lies.
It was first introduced in the banking sector in 2013 and the legislation was amended in 2016 to extend the rules to all authorised firms.
Saunders added: “However, with six weeks to go until implementation there is still time for firms to identify roles, draw up responsibilities and start to provide training on new conduct rules.”
The research also showed that once the legislation was explained to brokers, the majority of brokers (84%) agreed that senior individuals at their firms should be made directly accountable for their actions.
Most brokers (58%) also agreed that greater accountability would help to raise standards in their industry.
Ecclesiastical asked brokers how they were progressing with the key changes required ahead of the implementation of SMCR.
Half of the brokers said that they were on track with identifying senior management function and certification function holders, with a further 12% saying they made some progress.
However, 7% said that they had not yet started and almost a third (31%) said they did not know.
Almost two in five (38%) said that they were on track with training senior management function and certification function holders on new conduct rules.
While 16% said they made some progress, 12% said that they had not started yet, 34% said they did not know.
The same number of brokers (38%) said they were making good progress reviewing HR policies to ensure they fit with new requirements, with 13% making progress. Meanwhile 16% had not started yet and 32% said they did not know.
John Miller, insurance compliance firm – RWA, said: “The big message from us is that SMCR is not just another piece of compliance: it is statutory code of conduct with, thankfully, great detail on how to prepare for it and to operate to a good and reasonable standard within its standards.
“So, statements of responsibility are not about identifying people to fine but about creating a formal structure which helps firms operate in a manner which is least likely to lead to harm to the customer.”
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