Finance Monthly May 2019 Edition

It is true that culture in a firm is multi-dimensional and often elusive to define and so monitor. However, it is clear the changes brought about by SM&CR in the banking sector go beyond minor upgrades to internal processes and record keeping. Whilst, in the early days of implementing SM&CR, the focus will inevitably be on defining communities, modifying processes and tightening up record keeping, in the medium to long term SMC&R will force attention to switch to individual conduct and culture change. Challenge 5 Keeping SM&CR records will not be as straightforward as you expect. The final challenge you can expect is that of record keeping. I expect the immediate reaction of your firm, like many banks, is to use existing systems to store your SM&CR records. However, doing this poses significant challenges, even if they don’t surface immediately. Banks typically initially held SM&CR records in a variety of places, e.g. F&P records in the HR system, records of committee structures and meeting minutes in a governance system, appraisal records in another system, a record of the Management Responsibilities Map (MRM) on Excel etc. However, keeping records in this way created major challenges for central teams with the responsibility for oversight. The regulator expects ‘point in time’ reporting, i.e. for a firm to explain in detail which exec was accountable for what on any given date once the regime has commenced. So, fast forward a year or even a few months, and managing SM&CR via an Excel spreadsheet will unravel as board members leave, new ones join and others switch role (and so SMFs and responsibilities). As one Operations Director put it: “If you ask me what our MRM was in late September or early November I can tell you, but we completely lost track of what happened in October”. SM&CR requires firms to model, map and record their governance arrangements, and ‘date stamp’ every change.Add to this the requirement to ensure continued compliance with SM&CR by maintaining records and completing tasks to time and to standard, there is no simple way or shortcut to comply. That is why the teamat Worksmart decided to re-platform and upgrade the SM&CR offering taking into account the lessons learnt in banking. Financial services firms need to think hard about their existing systems and whether they are up to the demands of SM&CR before they go live. And if an existing supplier tells you that their HR/E-Learning/Appraisal system can manage the complex and newly introduced SM&CR requirements, that’s great – but exceedingly unlikely. Your response should be “show me – in real time” or even “let me play with the system for half a day to see how intuitive and capable it really is.” If the solution provider is unable or unwilling to do it, then you should take this as a sign that maybe it’s not all it’s cracked up to be. In the desire to get SM&CR implemented, record keeping is seldom ‘front of mind’ for the project team. However, the message is clear, if the quality of record keeping isn’t anticipated and confronted, major problems will bubble up after ‘go live’, and the longer sub-standard systems are relied on post live, the bigger the problem will become. Since 2015, the Worksmart team have been involved in multiple SM&CR implementations in the banking and insurance sectors. Whilst not claiming to be the definitive list, these five challenges were by far the most common we experienced. Our hope is that by being aware of these challenges, your implementation project teamwill ‘land’ SM&CR without hitting the potholes encountered by many in the banking sector. My job, with the help of all the Worksmart team, is to continue to support firms implement both the letter and the spirit of the regulation as speedily and painlessly as possible. It’s going to be a very busy year! Key Facts About Worksmart and SM&CR: ➤ Intuitive SaaS solution developed by industry experts ➤ More SM&CR banking clients than any other solution provider ➤ Award-winning products and people ➤ Trusted supplier to and member of key industry Trade Bodies ➤ Supplied to more than 50 regulated entities in the UK www.worksmart.co.uk 16 www.finance-monthly.com ASK THE EXPERT - SM&CR