Well, before any of us had even heard of Covid-19, those of us watching and observing the Financial Services marketplace were predicting a year of regulatory scrutiny, intervention and Senior Management being held to account.
What we actually got was something quite different!
Whilst there has been a lot of regulatory focus and comment on the responsibilities that Senior Managers have, it hasn’t necessarily been in the manner in which we expected. There has been a lot of talk especially from consulting and law firms about “imminent” Senior Manager enforcements all linked to the failure to demonstrate “Reasonable Steps,” but this has not become the reality in 2020.
So, what does all this talk of accountability, but without a regulator using its “teeth” to enforce against any evidence of a lack of it, mean? Are the FCA diluting the potential real regulatory gains that could be achieved by holding firms and individuals to account in the manner in they say they would?
In our work across all sectors of FS, it never ceases to amaze me how “uncompliant” firms are. I don’t believe they set out with the intention of not complying. I am not even sure that some firms even realise they aren’t complying, but in an environment when many of us in the industry regularly see this, with no apparent “holding to account”, it starts to make you feel that the FCA may need to “change tack” with their approach to supervising the market.
If we take a look at the output of the LCF Review and the Connaught Review, remembering that these were undertaken to consider the FCA’s regulation of London & Capital Finance Plc and the Connaught Income Fund Series One and connected companies, perhaps we get a “glimpse” at potential changes afoot with our Conduct Regulator.
There were nine recommendations for the FCA arising as a result of the LCF review which ranged from improving their own culture, to improving how they manage firm’s data in a usable, single format which provides a clear view of arising risks.
From the Connaught Review there were five lessons learnt, which once again ranged from culture to information sharing, IT systems and processes.
So, from starting the year with the expectation that the FCA would be pursuing a greater level of accountability from many Senior Managers across the industry, we’ve ended it with the FCA being on the proverbial “naughty step” for not effectively and efficiently overseeing those regulated entities.
But with a supervisory remit nearing 60,000 firms for conduct, approx. 20,000 for prudential supervision, from a staff of 4,000, surely it was never going to be an easy task!
No doubt both the FCA, regulated firms and UK retail consumers will all be keen to see the back of 2020, but I suspect for many different reasons! We look forward to the FCA taking more decisive and public action in 2021 when behaviour falls short of that expected by SM&CR. But to balance that comment, we hope that where the regulator sees firms making real progress to improving culture and creating real “purpose” within firms that this will also be taken into account where maybe they don’t see across the board all that they hope to when visiting firms.
But from the Worksmart team, we helped more firms and individual meet their regulatory requirements than ever before, so for us, we hope we will be able to do the same again in 2021.
For more information on how Worksmart could help your conformance with SM&CR and the Directory, contact our friendly and knowledgeable team on: email@example.com
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