Brokers in the dark over SMCR

Only 47% of brokers surveyed believe the new regime will improve protection for customers, according to research by Ecclesiastical.

The Senior Managers & Certification Regime (SMCR) legislation, which has been in place for banks and lenders since 2016, is being extended to insurers from December 2018.

Brokers will come under the scope of the regime in 2019.

It will effectively replace the Senior Insurance Managers Regime (SIMR) with a new set of guidelines designed to protect customers and make individuals more accountable for their conduct and competence.

As well as targeting senior employees the new rules mean a code of conduct must be set out for all staff. Employees who do a job where they could do significant harm to consumers must be approved annually by their firm.

Research
However research by Ecclesiastical across 250 brokers has found that only 36% were aware of the changes.

Even fewer brokers – just one in seven – feel informed about the legislation which the insurer stated indicated a huge knowledge gap in the industry.

Brokers are also struggling to see the benefits for customers.

Less than half of those surveyed (47%) believe the new regime will improve protection for customers, while only a third (34%) think it will increase confidence in being treated fairly by a broker.

Under a quarter of respondents (22%) agreed it will result in stronger broker-customer relationships.

Training
The provider detailed that only 14% of brokers have received information or training about the legislation.

Those feeling positive said the new guidelines will help to demonstrate the competence of staff (93%), improve governance (89%) and provide more clarity on roles, responsibilities and conduct (89%).

However, those feeling negative complained that the legislation will result in too much interference from regulators (80%), put too much pressure on senior staff (73%) and create a perception among customers that there is a problem with bad practice in the insurance industry.

Comply
Adrian Saunders, commercial director at Ecclesiastical said: “The SMCR represents a fundamental change for the insurance industry that will affect all firms in some way.

“Given the breadth and detail of the changes, brokers should start considering now what they need to do to comply with the legislation.”

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