Warnings Issued Concerning Leeds Reforms by Expert in Compliance
The UK's financial services sector is set for a significant overhaul with the proposed Leeds Reforms, a regulatory initiative aimed at modernizing the industry. One of the high-profile components of this reform is the reform of the Senior Managers and Certification Regime (SMCR).
The Leeds Reforms focus on driving regional growth, streamlining regulatory burdens, and increasing accountability within financial institutions. The reform of the SMCR governs how responsibility and conduct are allocated and enforced among senior financial executives.
David Kenmir, advisory board chair at compliance training provider Skillcast, has warned financial services businesses not to misunderstand key elements of the proposed changes in the Leeds Reforms. He emphasized that a streamlined Certification Regime does not mean compliance can be de-prioritized, but rather firms have greater discretion in how they uphold standards, with greater scrutiny.
Under the SMCR, moving towards a more principles-based approach demands more, not less, from leadership in terms of clarity, judgement, and accountability. Firms should treat the reform as an opportunity to embed good governance more effectively, not to scale back standards.
Kenmir stated that the shift in the Leeds Reforms is not about deregulation, but modernization, and firms need to focus on practical, day-to-day compliance terms. More flexible regulation places greater onus on firms to plan effectively, including targeted training, smarter resource allocation, and proactive risk assessment.
Ongoing employee training should be a non-negotiable part of compliance planning. Avoid thinking some functions are exempt from regulatory expectations in terms of training and competency. Regardless of role, staff must continue to be properly trained and competent, including those in wholesale roles.
The Certification Regime, despite being streamlined, is not being scrapped. Kenmir warned that some roles, particularly in wholesale markets, may not require the same level of training or oversight, but regulators expect all individuals in regulated firms to remain demonstrably competent.
The Chancellor has signaled strong intent, but the reforms remain in the consultation phase, with formal legislation expected to be introduced in Parliament later this year or early 2026. It is crucial for firms to stay informed and adapt to the changes as they unfold to ensure continued compliance and success in the modernized financial services landscape.
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