Why Regulatory Change Needs Clear Ownership

The volume of change facing regulated firms is significant. In recent years, firms have had to implement the Consumer Duty, operational resilience requirements, changes to the prudential regime for investment firms, new financial promotion rules, and reforms to the Senior Managers and Certification Regime itself. Each change touches different parts of the business and different Senior Managers.

Under the Senior Managers regime, each Senior Manager is accountable for their area’s compliance with regulatory requirements, including new ones. A Senior Manager can’t argue that they didn’t know about a rule change affecting their area. The Senior Manager Conduct Rules require them to take reasonable steps to ensure their area complies, and that includes keeping up with what compliance requires.

A Regulatory Change Process That Works

Horizon Scanning

Someone in the firm, usually the compliance function, should monitor regulatory publications, including consultations, policy statements, guidance, speeches and supervisory letters, and identify what could affect the firm. The FCA Handbook, PRA publications and industry bodies are the main sources.

Impact Assessment

Each relevant change should be assessed for its impact: which business areas, products, processes and systems it affects, what the firm needs to do, and by when. The assessment should identify the accountable Senior Manager.

Ownership and Planning

Each change should have a named owner, usually the Senior Manager responsible for the affected area, with a plan, resources and a deadline. Larger changes may need a formal project with board oversight.

Implementation

Changes to policies, procedures, systems, training and customer communications should be completed and tested before the rules take effect.

Assurance

After implementation, compliance monitoring or internal audit should check that the change has been embedded and is working.

Reporting

The board and relevant committees should receive regular updates on upcoming changes, progress and risks to delivery.

Where Accountability Sits

• Compliance, usually led by the SMF16 compliance oversight holder, typically owns horizon scanning, initial impact assessment and assurance.
• Business line Senior Managers own implementation in their areas and are accountable for compliance once the rules take effect.
• The chief executive makes sure the firm has the capacity to deliver change alongside running the business.
• The board oversees the firm’s approach and the delivery of significant changes.

Where a change doesn’t clearly fall within one Senior Manager’s responsibilities, the firm should allocate it explicitly rather than let it drift. SMF Capital’s guide to the Responsibilities Map explains how responsibilities are documented.

Responding to Consultations

Regulators consult on most significant changes before finalising rules. Firms that engage with consultations, directly or through industry bodies, understand the direction of travel earlier and can influence the outcome. Senior Managers should know which consultations affect their areas and whether the firm is responding.

Common Failings

• Scanning without assessment. Lists of regulatory publications with no analysis of what they mean for the firm.
• No clear owner. Changes identified but not allocated to an accountable Senior Manager.
• Late starts. Implementation left until shortly before deadlines, leaving no time for testing.
• Policy without practice. Policies updated but processes, systems and training not changed.
• No follow-up. Changes implemented but never checked to confirm they work.
• Underestimating capacity. Several major changes landing at once without enough resources.

Prioritising When Everything Is Urgent

At times, several significant changes land together, each with its own deadline. Firms need a way to prioritise that the board can see and challenge. Useful factors include the potential for customer harm, the regulatory deadline, the scale of change needed, dependencies on systems or third parties, and the supervisory focus on the area. Where a deadline genuinely can’t be met, early and honest engagement with the supervisor is almost always better than a late surprise.

Learning From Past Changes

Each major change is an opportunity to improve how the firm handles the next one. A short review after implementation, covering what went well, what was underestimated, and whether the firm spotted the change early enough, helps build a more reliable process over time. Firms that treat regulatory change as a repeatable capability, rather than a series of emergencies, deliver better outcomes at lower cost.

Technology and Regulatory Change

Many changes ultimately require system changes: new data fields, new customer communications, changes to monitoring rules or reporting outputs. Technology teams need early sight of regulatory changes so they can plan capacity. Senior Managers responsible for operations and technology should be part of the impact assessment for any change with system implications, not brought in once the policy work is finished.

Capacity and Resourcing

Regulatory change competes for the same people and budgets as business growth. Firms that underinvest in change capacity often find themselves rushing to meet deadlines or missing them. Common responses include dedicated regulatory change teams at larger firms, interim specialists for major projects, and fractional compliance support at smaller firms. SMF Capital’s fractional and interim SMF cover can provide senior compliance leadership for periods of heavy change.

The Finance Dimension

Many regulatory changes affect finance: new regulatory returns, changes to capital and liquidity requirements, client money rules and reporting deadlines. Finance teams need people who understand both the technical accounting and the regulatory rules. Accountancy Capital, a sister practice of SMF Capital, recruits qualified finance professionals below director level, including regulatory reporting accountants who help firms implement prudential and reporting changes.

Regulatory Change in Smaller Firms

Smaller firms face the same rules with far fewer people. Practical approaches include subscribing to a reliable regulatory update service, using trade association briefings, agreeing a simple quarterly review of upcoming changes at board level, and making sure the compliance officer, whether in-house or fractional, has time allocated specifically to regulatory change. The key is not scale but discipline: every relevant change identified, assessed, owned and implemented on time.

Keeping Senior Managers Current

Beyond the formal process, Senior Managers need to keep their own knowledge current. Regular briefings from compliance, relevant professional development, industry events and reading regulators’ publications all help. The annual assessment of each Senior Manager’s fitness and propriety should consider whether their knowledge has kept pace with changes affecting their area. SMF Capital’s guide to the fit and proper test explains the competence standard.

Questions for Boards

• Do we have a clear process for identifying, assessing and implementing regulatory change?
• Is each significant change owned by a named Senior Manager?
• Do we see a forward view of upcoming changes and delivery risks?
• Do we have the capacity to deliver change alongside running the business?
• Do we check that implemented changes actually work?

The Bottom Line

Regulatory change is a permanent feature of financial services, and managing it well is part of running a regulated firm. Firms with a disciplined process, clear Senior Manager ownership, adequate capacity and proper follow-up stay ahead of change rather than reacting to it. For more on the Senior Manager Functions involved, see SMF Capital’s Senior Manager Functions guide.