SMCR Training Roadmap

SMCR compliance training is a complex journey. That's why to ensure that your learners reach their destination, you will need a reliable roadmap.

Those in senior leadership positions or responsible for organising training, need to ask two important questions about their SMCR compliance planning:

• Does it support your culture, values, objectives and drive compliant behaviour?
• Does it ensure individuals understand and can apply the rules in their role?

Even if you cannot currently say yes to both questions, we hope that this SMCR training roadmap can help ensure that you can in the future.

1. Driving the right behaviours through training

The regulator makes it crystal clear that a healthy culture is aligned to a firm’s purpose, good leadership, appropriate rewards and effective governance, and that conduct and culture will remain a key focus of their engagement activity.

Successful firms will continue to shift from ticking the ‘regulatory box’ towards a culture that holds ethics and values at its core.

It makes sense to aim to prevent misconduct, saving the cost and potential harm to consumers. A values-driven approach also encourages everyone to be accountable for their conduct, no matter what role they perform.

The FCA Stocktake Report found insufficient evidence that firms were mapping the Conduct Rules to their values. Training provides a great opportunity to do this and help drive the culture and conduct within your firm.

Are your SMCR & Conduct Rules training plans...

• Aligned with your company values and objectives?
• Covering what each population needs to know, understand and be able to do?
• Tailored to ensure it is relevant to the workplace and role?
• Supported and prioritised by senior leaders within the business?
• An integral part of the onboarding process into the role?
• Validated to ensure the training is effective?
• Regularly reviewed to ensure it remains up to date and relevant?
• Followed up to ensure the desired learning is embedded?

It's great if you can answer 'yes' to all of these questions. But even then there remain challenges to your SMCR training success.

You will still need to encourage those who work in front, middle, back office, control and support functions to feel personally responsible for their conduct.

And your Board of Directors and senior management also need oversight of the conduct within their organisation.

Challenge yourself regarding your training effectiveness. Ask yourself the questions that we have posted here. We have produced a desk aid detailing the dos and don'ts of SMCR Training Best Practices.

The bare minimum

The initial temptation is to do what the rules state and tell your staff about the requirements. After all, factual training is easy to deliver - just put together some brief PowerPoint slides, copy and paste in the rules, and the job is done.

Except it isn't because this approach brings many risks, the biggest being demotivated and disillusioned staff. Here are some of the potential outcomes:

• Your staff are disgruntled that they have more accountability. After all, why should someone who's paid a relatively modest salary be accountable to the regulator in the same way as those highly paid bankers? "Are we all senior managers now?" could be the rallying cry. This is an understandable outcome and is highly likely to arise.
• Your staff don't have to worry because you, their employer, will protect them. People who are not in senior positions may believe that any misdemeanours will be dealt with internally, and the employer will bear the brunt of any regulatory action. However, that's not how the regime works. Insurance against the cost of regulatory fines isn't permitted under the rules.
• Staff worry that they'll have to work much harder to keep their jobs and not be fined. This is a big risk, as people may believe that how they perform now won't be good enough and they'll have to work harder – again, understandable.
• Your staff have to look after number one to ensure they're not in the firing line. A greater level of personal risk is hardly conducive to building great teams. This mentality threatens to eliminate team spirit.

Given that the training is aimed at people, many of whom have had little exposure to regulation and compliance before, this will be a big, difficult and scary message if not handled properly. In the rush to ensure regulatory requirements are met, you could end up opening up a whole hornet's nest of problems by damaging staff motivation. So, what's the solution?

2. Know, understand & apply

Let’s now explore our second question, which delves deeper into the training itself.

a. Document knowledge, skills & behaviours

You need to clearly document the knowledge, skills and behaviours required for each key role within the Senior Manager, Certified, Conduct Rules, Non-Executive Director populations.

The FCA is clear that they expect individuals to know the rules and have a deeper understanding of how they apply in practice as relevant to their role. So, it is vital that your training demonstrably facilitates this and below we have provided our key success criteria against which you can measure your SMCR and Conduct Rules training solutions.

b. Map learning paths to roles

You need to create clear learning paths for every role in each population – Senior Manager, Certified, Non-Executive Director or Conduct Rules.

This allows you to ensure that any training solutions are used with the right populations and allows you to tailor them to ensure that they are relevant to individuals roles.

Let’s not forget, this is not only a key requirement of our regulator, but it also means that the individual is much more likely to take on board the learning and actually apply it in their role, thus driving the behaviours you wish to see.

Learning paths allow everyone to know exactly what training is required and when. This makes it easy to track that everyone is getting the training they need at the right time. It also allows you to demonstrate to the FCA how you are meeting their rules regarding these training requirements.

We have created a 3-Step SMCR Training Model that provides a simple path and some solutions to help you achieve this.

c. Balancing practical & online learning

Your training needs to strike the right balance between digital and more practical learning solutions.

Whilst e-learning solutions can be a great way to provide knowledge, they are unlikely to be as effective at ensuring that the learner understands this information and, more importantly, can apply it within their day-to-day working practices.

It is important to ensure that you build on your digital learning, bringing it to life by using realistic, and challenging case studies and examples that are relevant to the individual’s role. This allows the individual the opportunity to confirm their understanding and put the learning into practice.

d. Managerial alignment

An effective way to ensure your training is tailored to individual roles is to include line managers in the delivery and facilitation of their subordinate's training.

Managers are best placed to bring the rules to life in the right context for the individual and answer any questions they may have.

Of course, in order for this to be effective and consistently delivered across your firm, it is important to equip your managers to be able to do this competently and monitor their activity to provide any further support, where it is needed.

e. Build checking mechanisms

Standard online testing, such as multiple-choice tests, goes some way to checking knowledge, and to a lesser extent, understanding.

However, you will need to have other checking mechanisms in place to confirm that individuals can apply the rules in practice.

f. Ensure learnings are applied

Finally, you need to check that learning is embedded into behaviours and working practices.

We can see from the Conduct Rules that the regulators believe that despite its title, the SMCR is not just something for senior managers alone. It is for everyone – each and every employee has a part to play in achieving the correct behaviour, attitude and conduct for their firm and their customers.

It’s one thing for an individual to be able to demonstrate that they can do what is required, it’s another for them to actually do so in their role.

Therefore, actively monitoring the activities and behaviours you want them to be demonstrating is key.

Firms need to invest in new systems for assessing and certifying annually their certified persons, recording the responsibilities for senior managers, conducting fit and proper assessments, and recording and reporting conduct rule breaches. Given that there are dozens of checks and attestations required throughout the year for all your senior managers and certified persons, firms also need new controls for identifying, escalating and resolving any gaps in compliance with SMCR.

g. Regularly review your SMCR training:

• Testing - Your performance management/appraisal mechanism should test competence and capability – are areas of weakness fed into training plans?
• Learn & adapt - The regulator is keen for firms to learn from mistakes and issues. Are systemic weaknesses from Conduct Rule breaches, or near misses, built into future training?
• Market events – bring to life things that have happened in your own industry including case studies to help staff understand issues better.

At Skillcast, we offer an extensive list of SMCR training modules to help you to address whatever your gap might be. Our training modules can simply be tailored to your business needs very easily.

We can build Learning Paths for populations and also offer support in evaluating the embeddedness of your training plan against a simple maturity model.

SMCR training roadmap

SMCR compliance training is a complex journey. That's why to ensure that your learners reach their destination, you will need a reliable roadmap.

Those in senior leadership positions or responsible for organising training, need to ask two important questions about their SMCR compliance planning:

• Does it support your culture, values, objectives and drive compliant behaviour?
• Does it ensure individuals understand and can apply the rules in their role?

If you cannot currently say yes to both questions, we hope that using this training model and our SMCR training roadmap can help ensure you do in the future.

Are we all Senior Managers now?

A key requirement of SMCR is that the FCA's Individual Conduct Rules apply to all staff, save for those in ancillary functions. These rules state that you must:

• Act with integrity
• Act with due care, skill and diligence
• Be open cooperative with the FCA, PRA other regulators
• Pay due regard to the interests of customers treat them fairly
• Observe proper standards of market conduct

In addition to the above rules, training your staff is a regulatory requirement. This training aims to help staff understand their responsibilities and the potential consequences of breaching any rules. Companies need to notify the FCA of any such action, and regulators could follow up by investigating further.

The message of staff training for all is difficult to get across. However, it is part of the FCA's desire to see strong cultures and good behaviours embedded within all firms. The FCA believe firms can achieve this culture through greater levels of accountability across the board.

A lack of individual accountability in evidence during the banking crisis is a driving factor behind the FCA's desire for a strong regulation culture. At the end of the day, the FCA lays down the rules, but firms have to deliver the training - which is where the problems could start.

Prevention rather than cure

The answer is to ensure that you get your training right, anticipating some of the problems that could come your way.

Here's what you need to make sure of:

• Training is accessible – at the very least, it must be in a language that the staff can understand, and it must show them how the Conduct Rules relate to their roles in your business. Staff will feel empowered and more motivated with this knowledge.
• Specific concerns are addressed – for example, how can administrators ensure they're doing enough to treat customers fairly in the new regime? How can back-office staff at asset managers ensure standards of market conduct are met? Information on how these staff members can meet the requirements must be proportionate and allay any irrational fears.
• Understanding is confirmed – be sure to test your staff. This will allow staff to demonstrate their understanding of the expectations and Conduct Rules. Don't let them leave the training without proving that they know what's coming.

Specialist e-learning can be an effective way of getting the technical detail and key messages across to the satisfaction of staff and the regulator. A specific training package on this subject may be just the ticket for many. While a tailored arrangement may be more appropriate for those who want to go deeper into key messages or give special attention to certain roles.

Combining either of these packages with training in related areas, such as whistleblowing, is beneficial to be repeated annually or more frequently. It is essential to make sure your staff don't forget their obligations.

Conclusion

Your SMCR and Conduct Rules training should be comprehensive and practical, ensuring that it is tailored to individual roles thus maximising the individual’s ability to understand and apply the rules in practice.

This will support your firm in driving the culture and conduct desired and, in doing so, meeting the regulator's requirements.

Want to learn more about SMCR Compliance?

We have created an SMCR roadmap to help you navigate the compliance landscape, supported by a comprehensive library of SMCR Courses and a fully integrated SMCR 360 Compliance Toolkit.

We also have additional free resources such as e-learning modules, microlearning modules, and more.