by Josh Blundell, Head of Research and Operations
Today is the day that the Senior Managers & Certification Regime (SMCR) kicks in for the asset management industry. The FCA hopes this move will strengthen market integrity by making individuals directly accountable and ultimately reduce harm to consumers – and lead to better long-term outcomes for the millions of investors whose money the industry manages. There is even a specific responsibility for authorised fund managers that covers value for money assessments, independent director representation and acting in investors’ best interests.
The conduct agenda pursued since the global financial crash has consistently signalled the need for a cultural shift in the industry. SMCR is the latest and perhaps the most persuasive prompt to date for firms to take a long hard look at their purpose and reflect on their role in the wider long-term savings landscape.
Is it really necessary for the FCA to spell out responsibilities in this way? Many of the customers we talk to on a regular basis would say it is. They still see remnants of the stale culture that placed little value on understanding end investors (though this outlook is thankfully far less prevalent than it was) and feel that they have to constantly remind firms just whose money they are running. In the wake of Woodford, customers are wary of the industry and there is no doubt that the reputational damage will take time to repair.
So can the industry rise to the challenge? The positive signs are there. We know that many teams at the product coalface in asset management have, for some time, been working hard to establish governance that genuinely considers customers and their needs. And not just because of regulatory pressures, but because it felt like the right thing to do. In some cases, they have met with pockets of resistance but with enough impetus from SMCR and with more NEDs starting to make their voices heard perhaps the tide is turning. The Asset Management Market Study remedies have already prompted a greater quality of debate in the industry – perhaps the SMCR will encourage firms to turn those words in to action.
There are some simple ways that you can create a direct line to end consumers that will go a long way to evidencing a robust response to SMCR – get in touch to find out how.