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2019 is likely to go down as one of continued focus on culture within regulated firms, but there's still more work to be done.
After many months of activity, the FCA published its final report of the Wholesale Insurance Brokers market study. Launched way back in November 2017, its aim was to assess how competition was working in the sector. Many in the industry held their breath only to then heave a collective sigh of relief as no evidence was found of significant levels of harm that merit the introduction of intrusive remedies.
That’s not to say that all is rosy and some areas for improvement were identified. A shot across the bows and there’s no doubt that the FCA will continue to watch for signs of poor practice.
Changes in society have influenced the ability for whistleblowing to be seen as more acceptable in the workplace. Various studies have reported a significant increase in the number of whistleblowing reports, challenging the culture in firms large and small.
Perhaps it’s no coincidence that the increase has occurred as the Senior Managers and Certification Regime (SM&CR) was introduced into the financial sector.
As SM&CR will be extended to solo-regulated firms, including insurance brokers, from 9 December 2019, one can only assume that whistleblowing complaints will continue to increase.
The Senior Managers and Certification Regime (SM&CR) is arguably the most far reaching and significant piece of regulation to be introduced for some time.
Much of the focus relates to the tone set by a firm’s senior management and the inevitable ripple effect that ultimately impacts how the customer is treated. No longer will only those holding control functions (senior management functions post 9 December 2019) be directly responsible to the FCA.
With the introduction of the Certification Regime there will be more personal accountability below senior management, depending on role and the likelihood of significant customer harm. This prompts firms to consider whether their training and competency scheme is robust and that their people (HR) process and procedures really ensure that staff know what they are accountable for and are fully equipped to carry out their role.
RWA’s experience is that this area is consistently weak in the insurance broker community and requires more focus and attention. Like many things in life, prevention is better than needing a cure!