Government launches SMCR review and calls for insurance feedback

Jeremy Hunt MP_Chancellor of the Exchequer - portrait

The government has launched its review of the Senior Managers and Certification Regime, part of a wide-ranging shake-up to make UK financial services more competitive post-Brexit.

The call for evidence came alongside the Financial Conduct Authority and the Prudential Regulation Authority issuing a discussion paper with 22 questions seeking input on potential ways to improve SMCR.

HM Treasury is calling for financial services firms, including insurance, to help answer questions that will shape any reform of SMCR.

Key questions in its paper include:

  • Has SMCR delivered against its core objectives?
  • Do these objectives remain right for the UK?
  • Has SMCR remained true to original objectives, or has the scope of the regime shifted over time?
  • How have individual firms found the experience of SMCR?

Authorisation approval time concerns 

In the document, HM Treasury acknowledged concerns about the FCA being slow on SMCR role authorisations.

There is widespread insurance industry concern at the slow rate at which the FCA is approving key general insurance broking roles, function changes within companies and firms looking to start up in insurance.

The paper said: “Some stakeholders have raised concerns about their experiences of specific aspects of the regime.

“One such example is the authorisations process, where stakeholders have suggested the timeframe for the processing of applications can be too long and can therefore cause issues for business planning.

“The regulators have taken action to address known issues with these processes. The FCA is taking forward an ambitious programme of work aimed at reducing the backlog of authorisations and improving the agility and efficiency of regulatory processes, which has already significantly reduced the backlog.

“The PRA has also made a number of improvements to its processes and resourcing, and is automating aspects of its approvals work to improve efficiency.”

Brexit dividend

Plans to review SMCR were first announced in December last year.

Chancellor Jeremy Hunt said reform of SMCR and other light-touch regulatory reforms announced would mean the country could ‘seize on our Brexit freedoms’.

However, the plans have met a guarded response, with concerns about the extra costs that could be heaped on firms.

Explaining a key reason for the review, HM Treasury’s launch document said: “The government is clear that the financial services sector is a key pillar in its vision to drive growth across all four nations of the UK.

“As part of this, it is important that the UK is recognised as one of the best places in the world to conduct financial services business, and that this sector is globally competitive.”

Insurance firms have until 1 June to respond to the call for evidence and the joint discussion paper.

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Interview: Melissa Collett

Melissa Collett left the CII at the end of May. A champion of professionalism and customer fairness, she has some wise words for an insurance industry on the brink of change.

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