Financial services regulatory compliance is complex, especially for those falling under the SMCR. We have created a series of scenarios to test that learners know how to apply what they have learned when faced with dilemmas that could happen in the workplace.
- SMCR scenario: New Prescribed Responsibility
- SMCR scenario: Disclosures within recruitment
- SMCR scenario: Reporting lines
- SMCR scenario: Learning & development
- SMCR scenario 5: Available May 22
- SMCR scenario 6: Available Jun 22
We are publishing a series of 12 scenarios, so bookmark this page or sign up for our newsletter to stay up-to-date with our newly added tests.
1. SMCR scenario: New Prescribed Responsibility
The FCA started a consultation exercise in 2021 setting out proposals to enhance diversity and inclusion in financial services. The FCA also linked this to its work on the treatment of consumers, including vulnerability and the new Consumer Duty.
The Regulators may make Senior Managers (SM) directly accountable for diversity by using Prescribed Responsibilities (PR) that deal with the firm's culture.
If the FCA adds a new PR for culture, which of the following would be best practices for regulated firms?
- Explicitly assign the PR to an SM, and record and report to the FCA.
- Like other PRs, it may be shared between more than one senior manager.
- Under the 12-week rule, temporarily allocate the PR to a CP.
- If reasonable steps were taken the SM owning the PR has a breach defence.
2. SMCR scenario: Disclosures within recruitment
You have hired a new compliance officer. Their role will be to champion anti-fraud measures across the business. On this new hire's first day, you receive a call from your HR team saying that they overlooked a disclosure on the individual's application form.
The candidate stated they have a conviction for using their ex-police warrant card to get free train travel, yet they didn't raise this during their interview with you.
Which of the following actions follow best practices?
- Take no action, as the person has started the role; this is an HR oversight
- Start the employment with a verbal warning related to the conviction
- Request HR reviews onboarding procedures to prevent this from happening
- Terminate the offer of employment and seek legal advice
3. SMCR scenario: Reporting lines
David, the line manager of a team of five customer-facing sales staff, has announced his resignation to join another firm. Olivia, a Senior Manager, is reviewing the impact of this departure on reporting lines for SMCR compliance.
After consultation with her colleagues, she decides not to replace David in his role. The best person to manage the performance of David’s team would be a sales manager based in Europe, who reports to an SMF based in the UK.
Another option would be to assign the team to a UK-based sales team manager, although his team is not performing well.
Which courses of action can Olivia pursue with respect to David’s team?
- Assign the team to the Europe-based line manager with no further changes, as an overseas manager cannot be in the scope of SMCR
- Make the team report directly to the SMF, or UK-based sales team manager, even if the Europe-based manager has input on team performance and rewards
- Assign the team to the Europe-based line manager, but only if that line manager accepts coming under the scope of SMCR
- Assign the team to the Europe-based line manager, but only if that line manager relocates to the UK
4. SMCR scenario: Learning & development
You are reviewing the information provided by line managers which supports the issuance of certificates to Certification Function holders. You notice that there is no Learning and Development (L&D) plan in place for the most experienced salesperson.
When you ask the line manager why there is nothing in place they say that there is nothing left for the individual can learn about their role.
Which of the responses below follows best practice?
- This is fine. If the salesperson is very experienced and the line manager agrees, no further learning is not needed.
- All individuals must undertake mandatory compliance and conduct rules training as a minimum.
- Markets, products and services are constantly changing and the individual must train to keep up to date with those developments.
- If the salesperson doesn't have any specific needs, they should be assigned the same L&D plan as their counterparts.
More on FCA Compliance
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