ANSWERABILITY: The new rules have one main purpose. It is to provide consumers with greater peace of mind.
So how does the new addition to the SMCR 2018 work?
In simple terms, it means those at the very top of the big insurers will be accountable for any wrongdoing.
The update to the regulations will also help to ensure that a code of conduct gets set out for all staff.
Insurance firms will have annual obligations to approve employees who:
- Perform tasks that could do significant harm to consumers.
- Do a job that could harm financial stability in the United Kingdom.
The Economic Secretary to the Treasury and City Minister commented on the move. He pointed out that regulation in Britain is at a premium. It is only one reason why the United Kingdom attracts financial services investment.
The Senior Managers and Certification Regime
Financial answerability is part of the Senior Managers and Certification Regime. It influences those at the top to display the right behaviours and values. That has become an expected practice by British consumers.
The first introduction of the SMCR for banks and building societies took place in 2016. The extension to, and the inclusion of, insurance firms starts from the 10th of December 2018.
New rules of the Regime will extend to insurance firms from this date. It should ensure individual accountability for financial misconduct.
In particular, it targets the most senior levels within the insurance sector.
The Regime already applied accountability to banks and building societies before the extension. Investment firms, credit unions, and UK branches of foreign banks are also part of the ruling.
UK Government had legislated across all financial services firms on a previous occasion. The new accountability extension 2018 will focus on the insurance sector.
The Financial Conduct Authority are consulting on the extended Regime. They want to establish how it will apply to smaller firms. The FCA is the only regulator of these so-called ‘solo-regulated’ firms.
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