Do You Have Robust Governance?
On discussing future change to financial services, from an FCA perspective, “… we have not prescribed all responsibilities. Nor have we prescribed how they should be allocated. Nor the governance arrangements firms should have in place. Nor how firms and individuals should make decisions.
So ultimately the responsibility here falls to firms and the individuals running them to work out issues for themselves in a way which is consistent with their business.”
Tracey McDermott, Acting Chief Executive, FCA, delivered at the City & Financial conference on Personal Accountability in the Financial Services Industry, 2 December 2015
The Senior Management & Certification Regime Is Coming
Good governance is the foundation of any business and this extends from the basic policies, procedures and manuals through board and committee terms of reference and even regarding the structure of arrangements so that they are all appropriately linked and are relevant to the business.
Running a risk based business relies on having a coherent, relevant and accurate suite of policies.
Around half of the fines in 2015 were for Compliance Officers
The Financial Conduct Authority (FCA) meted out more than £335,000 in fines to compliance officers in 2015, underlining its renewed zeal for targeting individuals. A clear message from the fines and commentary around the cases is that as Compliance Officer, you have to know and understand your business.
Not only is it important to know your business, but you also need to be able to implement and embed systems and controls and being influenced by senior management is no defence and one FCA employee stated that you should show “backbone even when challenged by colleagues.”
The crackdown shows that the regulator is baring its teeth and that only looks set to intensify, with the FCA vowing to ‘further strengthen individual accountability’, and this is in line with the roll-out of the SM&CR next year.
In many of our interventions, we have found that policies and various procedures either didn’t relate to the job at hand, were not updated (often for many years) leading to heuristics being employed, were not embedded (staff had their own procedures on sticky notes), not applied (bore no relation to the work) or in reality didn’t physically exist. This, sadly, was often to the surprise of senior management.
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