Why Management Information Matters to the Regulator

When the FCA looks at whether a Senior Manager took reasonable steps, one of its first questions is what information they had. Did they receive information that should have alerted them to the problem? If they did, what did they do? If they didn’t, should they have asked for it? Poor management information is a recurring theme in enforcement cases, and “I didn’t know” is rarely an adequate answer if the Senior Manager never asked.

The Senior Managers and Certification Regime makes this personal. Under the Senior Manager Conduct Rules, Senior Managers must take reasonable steps to ensure their area is controlled effectively. The FCA’s systems and controls rules in SYSC expect firms to have the management information needed to run the business safely. The Consumer Duty adds an expectation that firms monitor customer outcomes and act on what they find.

What Good Management Information Looks Like

Designed Around Responsibilities

The best management information starts from the Senior Manager’s Statement of Responsibilities. For each area they’re accountable for, it answers a simple question: is this working, and if not, why not? Information designed around the firm’s reporting structure, rather than the Senior Manager’s accountability, often leaves gaps.

Focused on Outcomes, Not Just Activity

Activity measures, such as the number of files checked or calls handled, show that work is being done. Outcome measures show whether it’s working: complaint rates, error rates, customer outcomes, breaches, overdue actions. Good information includes both, with the emphasis on outcomes.

Clear About Thresholds

Numbers without context are hard to act on. Good information shows what “normal” looks like, sets thresholds or risk appetite limits, and highlights where they’re breached. A red, amber and green status only helps if the thresholds behind it are sensible.

Showing Trends

A single month’s figures can mislead. Trends over time show whether things are getting better or worse, and whether actions are working.

Honest About Bad News

Management information that is always green should prompt questions. Good reporting surfaces problems early, including issues that are uncomfortable for the people producing it.

Proportionate

More information isn’t better information. A Senior Manager who receives hundreds of pages each month may miss the one figure that matters. The best packs are short, focused and supported by detail available on request.

Common Failings

• Information that doesn’t match responsibilities. A Senior Manager accountable for an area that no report covers.
• Activity without outcomes. Plenty of volumes, no sense of whether customers are being treated well.
• No thresholds. Figures reported without any indication of what’s acceptable.
• Stale data. Information that arrives so late it can’t be acted on.
• Unchallenged reports. Packs received and filed without questions.
• Data quality issues. Figures drawn from unreliable systems, with no one checking their accuracy.
• Too much information. The important signal lost in the volume.

Management Information by Function

Chief Executives

A small set of measures across the whole business: financial performance, customer outcomes, conduct and operational incidents, control function findings and major risks. The Chief Executive needs to see where the firm is off track, not every detail.

Compliance and MLROs

Monitoring findings and overdue actions, breaches, regulatory change, financial promotions, and for MLROs, suspicious activity reporting volumes and timeliness, alerts, backlogs and high-risk customers. See SMF Capital’s guide to SMF16 and SMF17.

Chief Risk Officers

Risk appetite measures, emerging risks, stress test results, capital and liquidity positions, and the status of risk events. The Chief Risk Officer needs information that allows them to challenge, not just report.

Operations

Service levels, incidents, outsourcing performance, technology resilience and the status of important business services. The Chief Operations function relies on this to meet operational resilience expectations.

The Board

A concise view across all Senior Managers’ areas, with the ability to drill into detail. Boards should ask whether their information would have alerted them to the problems that have affected similar firms.

The Role of the Finance Team

Much management information is produced by the finance function, particularly anything involving financial performance, capital, liquidity, client money or regulatory returns. The quality of those reports depends on qualified people who understand both the numbers and the regulatory context. Accountancy Capital, a sister practice of SMF Capital, recruits qualified finance professionals below director level, including management accountants and regulatory reporting specialists for regulated firms.

How Senior Managers Can Improve Their Information

• Start from the Statement of Responsibilities. List what you’re accountable for and check that each area is covered.
• Ask what would tell you something is going wrong. Then make sure you receive it.
• Set thresholds. Agree what “acceptable” looks like and ask to be alerted when it isn’t.
• Challenge what you receive. Ask questions, and record them. Challenge is itself evidence of oversight.
• Check data quality. Ask where the figures come from and who checks them. Internal audit can help.
• Record requests for better information. If the information isn’t good enough, a documented request to improve it shows reasonable steps.

Management Information and the Consumer Duty

The Consumer Duty has changed what many firms need to measure. Firms must monitor whether customers are receiving good outcomes across products and services, price and value, consumer understanding and consumer support, and whether outcomes differ for groups such as vulnerable customers. The board must review an annual assessment of those outcomes.

That places new demands on management information. Complaint volumes and sales figures are no longer enough. Firms need measures such as call abandonment and waiting times, how often customers get stuck in processes, whether communications are understood, and whether some groups of customers get worse outcomes than others. Senior Managers responsible for customer-facing areas should make sure their information reflects these outcomes, and that the data behind it is reliable enough to support the board’s assessment. SMF Capital’s article on the Consumer Duty and the SMF framework covers where accountability for outcomes sits.

Data Quality and Systems

Management information is only as reliable as the data behind it. Many firms produce reports from spreadsheets assembled by hand, with no clear ownership of the underlying data. That creates a risk that errors go unnoticed and figures are interpreted differently in different reports. Senior Managers should know where their figures come from, who owns the data and how it is checked. Internal audit reviews of key management information, and clear definitions of each measure, are simple ways to improve confidence.

For New Senior Managers

Reviewing management information is one of the first things a new Senior Manager should do. If what they inherit is inadequate, asking for improvements early, and recording the request, protects them and strengthens their area. SMF Capital’s Senior Manager Functions guide explains the responsibilities that information should cover.

The Bottom Line

Good management information is the practical foundation of Senior Manager accountability. It should be designed around each Senior Manager’s responsibilities, focused on outcomes, clear about thresholds and honest about bad news. Senior Managers who insist on it, challenge it and record what they do with it are far better placed to spot problems early and to show the regulator they took reasonable steps. For more on how the regulator assesses that, see SMF Capital’s analysis of FCA enforcement trends.