Credit Unions and the Senior Managers Regime: Part 1
Updated: Apr 26, 2019
The Senior Managers Regime (SMR) has implemented new rules in 2016. Credit Unions have been operating under the new rules, but it may be useful for all managers involved to be reminded of their responsibilities. This article series will do a deep dive into the SMR and how it relates to Credit Unions specifically.
We all recall the fallout from the 2008 financial crisis when many household names in banking and finance got themselves and many ordinary people into unplanned and sometimes catastrophic financial difficulty. After the crash the Parliamentary Commission on Banking Standards was established to conduct an inquiry into professional standards and culture in the UK banking and finance sector and to make recommendations for change to avoid a recurrence of 2008.
Just to remind ourselves, the SMR is made up of three parts. Firstly, it creates direct accountability to the Regulators for individuals taking important decisions or participating in these decisions. It also says that the most important senior functions at the credit union must be clearly defined.
Secondly, the certification process requires credit unions to certify that certain managers are “fit and proper” to perform their assigned functions, taking into account their qualifications, training, competence and personal characteristics.
Thirdly, the conduct rules are the regulator-prescribed code of conduct applying to all non-ancillary staff within firms. Credit Unions are required to report breaches of the conduct rules to the appropriate regulator.
Credit Unions have a responsibility to embed a culture of responsibility and accountability with the SMR in mind. Over the coming articles we will describe what this should look like at the credit union.