The UK's Senior Managers & Certification Regime, one year old today, has already had a positive effect on the financial services sector, according to a survey of nearly 200 senior financial services executives polled by Duff & Phelps.

The survey found that 55% believe that the SM&CR has affected the banking and alternative investment communities positively, with just 15% saying that it has had a negative effect.
 
With the first anniversary of the regime falling today, firms have seen a real change in culture over the last year because of the Government's watershed regulation.
 
Monique Melis of Duff & Phelps told Compliance Matters: “The threat of personal sanctions is ensuring that compliance functions put their duties before other considerations. Where managers fail to support them, they themselves may face penalties. We have seen the SMR start to change the way in which compliance departments organise their budgets. They are not just counting compliance costs, but also the costs of hiring a replacement compliance officer or interim staff, for regulatory penalties and remediation in cases of failures, and for their own personal liability if things go wrong. In short, this regime may have been a game-changer after all. Almost a decade after the financial crisis, cultural change in financial services is finally starting to happen.”
 
Duff & Phelps surveyed 183 senior financial services executives, compliance people and investment managers operating in the US, Europe and Asia in January. The rest of the survey is discussed here.
 
Julian Bentley, the director of risk and compliance at Alderbrooke, commented on asset managers’ preparations for the SMR in early 2018: “Though the SMR is not currently at the top of the agenda for most all asset managers, we expect this to change as we approach the middle of the year. Whilst the more astute firms are putting together working groups, the majority still seem fairly in the dark as to what the regulation will entail. As a result, they are basically playing a waiting game until a consultancy paper is released in the next month or so. We therefore expect to see an influx of consultancies coming into firms at that point to help them with compliance.
 
“This is not an industry which has dealt with regulation of this magnitude before, so most managers are relatively inexperienced in regulatory compliance when compared with other areas of financial services. They therefore need to understand the enormity of this regime very quickly or it could be a real shock to the system.”