As you may be aware, the regulatory framework in relation to employees of regulated firms will significantly alter over the coming months. There are three main changes that will all come into effect by the end of January 2016:
- The Senior Insurance Managers Regime (SIMR).
- The PRA/FCA requirements in relation to whistleblowing.
- Solvency II in respect of remuneration.
These mandatory changes mean that regulated businesses will have to a significant amount of work to undertake to ensure they meet these requirements.
While the SIMR and whistleblowing consultations closed earlier this year, the outcome of these consultations is not yet known meaning that insurers may only have a few months to undertake the significant work necessary to design and implement these mandatory changes.
Likewise with the Solvency II remuneration code coming into effect from 1 January 2016, employers will have to start to think about the design of compliant remuneration policies and bonus plans, as well as remuneration governance now.
Unlike many measures, this suite of changes is likely to require a multi-disciplinary approach in regulated businesses combining a mixture of legal, compliance, HR and internal audit resources, as well as the board understanding its responsibilities in respect of the changes to whistleblowing and the directors' personal regulatory accountability under the SIMR.
To help you manage this process and to mitigate both legal and regulatory risk, we will be holding a seminar in the autumn to help prepare you covering the new frameworks, what you need to do and how to go about it. As a starting point in tackling these subjects, we will be sending out a series of short videos covering the key issues around Solvency II which will highlight the need to:
- Review or draft your remuneration policy.
- Review bonus plan wordings.
- Consider setting up a remuneration committee.
- Review your governance around remuneration.
These will be available on our website from 10 July 2015.
In relation to the whistleblowing requirements, steps you are likely to have to take to ensure compliance can be expected to include:
- An audit of your existing whistleblowing policies and procedures.
- Identifying whether your procedures comply with the revised regulatory requirements and any steps that will need to be taken.
- Identifying which internal function or functions are best able to meet the new requirements as having operational responsibility for whistleblowing disclosures (both internally and from external parties).
- Assessing the need for training across your workforce and for those with responsibility for the operation of the whistleblowing policy.
- Amending your template documents (employment contracts and settlement agreements) to include the mandatory statements.
- Producing a statement to be available to third parties (for example, customers or suppliers) identifying how they can make disclosures of wrongdoing.
- Drawing up terms of reference for your independent director whistleblowers' champion and undertaking one to one training with him or her on discharging their regulatory obligations and how, in practice, to manage whistleblowing disclosures.
- Employee training to help them understand the legal and regulatory framework and their rights and duties, how to identify wrongdoing and what steps are available to them.
- Training those responsible for the operation of your whistleblowing policy on their duties and how to undertake and manage an investigation.