Should the legal function live within the Senior Managers and Certification Regime? - Mitratech

Should the legal function live within the Senior Managers and Certification Regime?

legal function with senior managers and certification regime

Recently, The Global Legal Post covered the fact that lawyers in the finance sector may soon be regulated by both the Law Society and the Financial Conduct Authority. The proposal to include UK In-house Lawyers within the financial sector under the Senior Managers and Certification Regime could mean they face double regulation, a topic that has been strongly criticised by many financial firms as well as the Law Society of England and Wales.

Outgoing Law Society Chief Executive Catherine Dixon was against the decision to include the legal function of an organisation within the new Senior Managers and Certification Regime. She points out that it will add to the regulatory burden because solicitors will be regulated by the Financial Conduct Authority (FCA) as well as the Solicitors Regulation Authority (SRA) which will result in duplication of work and will increase the costs of doing business.

The Senior Managers Regime raises the expectations of Senior Managers across all areas of the firm, and this may now include management of the legal function. Catherine Dixon is not the only one to be expressing concerns; many firms have raised numerous questions about the inclusion of the legal function. Many feel it has not been made clear enough within the regulation that a Senior Manager must be appointed for overall responsibility of the legal function, while others feel that it is not appropriate for the Senior Managers Regime to apply to the legal function at all.

The most talked about concern, however, is the proposal by the FCA to designate General Counsel and Heads of Legal as Senior Managers for the purpose of the new Senior Managers and Certification Regime. Most firms believe this decision could post significant changes in culture for in-house legal professionals within financial services. Objections to the inclusion of in-house legal stem from the advisory nature of the role played by General Counsel or Heads of Legal which is not one that typically involves management of a firm’s affairs.

Whether you are an in-house Lawyer, waiting to see if it is decided that the legal function should remain under the Senior Managers and Certification Regime, or you are a Senior Manager already regulated by the Senior Managers Regime it is a regulation that cannot be ignored.

The FCA’s role of Senior Manager is relentless. Juggling policy, procedures, regulation and compliance whilst demonstrating the steps they have taken to prevent regulatory breaches is a gargantuan task and failure to comply could lead to fines, disqualification and even a prison sentence.

Organisations can protect themselves and their employees and demonstrate best practice by implementing bespoke technology that ensures a clear compliance audit trail for the benefit of the Board, Senior Management, Auditors and Regulators.

– Mark Delgado, General Manager, Compliance and Operational Risk at Mitratech

Policy Management software such as PolicyHub mitigates risk and saves valuable man hours by automating and streamlining processes, freeing senior managers to focus on the job in hand.

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Implementing a robust Policy Management software solution enables financial organisations to deliver the right SMR policies and procedures to the right people, ensuring they become accountable by signing up to them and providing a detailed audit trail, reducing the risk of regulatory fines and reputational damage.

While we are in a transitional phase regarding the Senior Managers and Certification Regime, there will be concerns regarding the impact on individuals across financial service companies, including the legal professionals. To mitigate this, firms must put in place a robust infrastructure that clearly demonstrates the control and responsibilities of the decision makers. The use of PolicyHub is one such tool which links the policy and procedural documentation with specific accountabilities on the Board and their senior management in a way that provides evidence of continual review to auditors and regulators.

– Stuart Murdoch, Director of the Second Line of Defence consultants, 2LOD Ltd

At Mitratech, we offer both Governance Risk and Compliance as well as Enterprise Legal Management software to help you overcome the obstacles you may face in the near future as a result of these changes. We have industry veterans with over 10 years of experience working with legal departments, who will be able to guide you towards the right solution for you. Contact us for more information at

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