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FCA predicts £547m cost to industry from Senior Managers Regime extension

MoneyThe FCA expects the extension of the Senior Managers Regime to cost the financial services industry at least £547m in up front expenses.

In a consultation released today, the FCA confirmed its plans to roll out similar rules as those that currently apply to banks to nearly all financial services firms.

Firms including advice businesses (provided they are not sole traders) will have to prescribe specific responsibilities to particular individuals to ensure accountability and certify that those below them are fit to do their jobs.

All firms will also have to meet a handful of new conduct rules.

The regulator’s cost benefit analysis shows that for “core” firms to fall under the rules, a one-off cost of £190.5m to £193.1m is expected, with a further ongoing cost of £65.4m to £81.1m.

FCA reveals how it plans to extend Senior Managers Regime to advisers

For “limited scope” firms, including one-man-bands who will not have to adopt some of the prescribed responsibilities, this figure is similar, at £194.3m to £196.3m up front, and £53.2m to £76m thereafter.

“Enhanced” firms – those that are the largest and most complex, with extra requirements covering less than the top 1 per cent of regulated firms – will take a up front hit of roughly £162m and face between £21.5m and £33.5m in ongoing costs.

The figures are based on self-report data after the FCA sent a survey to more than 2,000 firms asking how much they predicted applying various areas of the rules would cost.

The FCA itself expects to spend £13.4m over four years implementing the new regime.

The regulator adds that lower redress payments and fines for firms as the result of better controls under the SMR are likely to outweigh the compliance costs of the reforms.



Andrew Tyrie warns over ‘sluggish’ senior managers regime progress

Influential Treasury committee chairman Andrew Tyrie has warned progress by the regulators in bringing forward the new senior managers regime has been “sluggish” and “inadequate”. The SMR is due to replace the approved persons regime for the UK’s largest financial institutions from March this year. It will then be rolled out to all regulated firms, […]

HBOS plc 480

FCA investigates HBOS senior managers

The FCA and Prudential Regulation Authority are investigating some former HBOS senior managers about their role in the failure in the bank. The FCA says the investigations will “determine whether or not any prohibition proceedings should be commenced against them”. It adds: “The FCA and PRA continue to review materials with a view to making […]


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. I am not sure if the FCA do this intentionally or it just doesn’t seem to sink in to their thick skulls……

    The constant rule making and changes will NOT cost the “industry” is passed on to the “consumer” in the same way as their (FCA) costs, levies etc etc etc

    Senior Managers Regime (SMR)……?
    And like always the regulator is 10 years to late

    The public, the Press, the MPs and House of Lords really need to consider; is the £101,000 average (wage cost divided by staff) salary for the employees at Canary Wharf is actually value for money ?

    It seems quite obvious to us all, retrospective regulation is very expensive and not working and therefore renders the FCA “not fit for purpose”

    If the current Status Quo remains-:

    Believe you me, cost will continue to increase, levies will continue to increase, and the FCA’s argument to paying premium salaries to secure the best personal, AKA greasy pole climbers, is as obvious as a giraffe trying to get into a hippo’s only wedding !

    • Che Guevara, you of all people should know that averaging something like wages is intentionally misleading. The cleaners, the caterers, the administrators – You think they want to be bundled into your tirade?

      AS with everything in life the privileged few skew the majority.

      That also goes for labelling a large group of people that – from my experience – are trying to do a good job as ‘greasy pole climbers’.

      • Hi Matt

        Not heard from you in a while…. been on holiday ?

        The cleaners, the caters the admin staff bundled in my tirade, no I don’t think they do…. but as you put it… that’s life, we are all guilty by association !

        The vast majority work hard and do an outstanding job but unfortunately the FCA are one of the worst at pointing fingers and bringing out a very broad brush and then expertly missing the problem or identifying the cause.

        As for averaging the wages hits the nail on the head, and should cause some kind of revolt from the rank and file from within, not only externally. Its quite unsavory these few are paid such high amounts when there maybe quite a few (majority) who are not rewarded and walked all over because of this ?

        Maybe one may consider a mass walk out (i would whole heartedly support this) sounds like you guys are just as fed up with the FCA and politics as we are ?

        But then did I not hear or read that every-one at the FCA got some sort of bonus ? ….. Nice !

  2. Julian Stevens 26th July 2017 at 8:26 pm

    Cost:Benefits Analysis anyone?

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