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The Key Conduct Challenges Confronting Financial Services Firms

By The Enforcd TeamThe Enforcd Team

Concluding our series reflecting on Megan Butler’s speech to the FT Investment Managers Summit, we examine the key conduct challenges confronting corporations.

As we were writing this, the fallout of the Carillion collapse was unfolding live on the news websites. With each day – even hour – it seems we’re treated to fresh and even more disturbing revelations. The response from the public seems to be a roll of the eyes at another corporation found to be failing in its duty.

This is a problem for so many reasons. Over the past six blogs, we’ve been exploring the themes to emerge from Megan Butler’s speech to the FT Investment Managers Summit Europe. Her message rings true today. For all the good work done by the financial services sector, there are still many areas in which it is letting itself down. The world is changing, and regulators are stepping up to demand greater accountability.

Action to be taken

Butler’s intention was to focus the minds of her audience on what they can do to ensure their company meets corporate conduct expectations. It’s a complicated process and involves instilling the same ethos company wide, recognising evolving risks and sharing information across the company as a whole.

Perhaps most important is to monitor compliance. A look at Carillion’s website where it outlined its mission was enough to demonstrate the problem. Here was a company which promoted its ethos, but failed to follow it, or even measure it. As they discovered, compliance should be about much more than a few words on a website. They must be rigorously monitored and assessed. The results, when they are not could be catastrophic.

Achieving greater standards of corporate responsibility, then, helps everyone but the landscape is constantly shifting. As Butler pointed out in her speech, 2018 was heralding a host of developments which would influence corporate best practice.

Big questions ahead

Brexit will continue to be a moveable feast throughout the year as businesses struggle to understand their corporate compliance obligations.

New regulations such as GDPR, PRIIPS, MiFiDII and others will require an adjustment of thinking, and new practices to be brought in. She offered reassurances that companies would not necessarily be facing fines from the moment of implementation – as long as they could show that they were making moves towards compliance.

Indeed, she was quick to acknowledge how much support the sector will need from the regulators themselves. The FCA wants corporations and executives to assume a greater responsibility, but she acknowledged that it must make efforts too. This is why it is increasing the amount of support it offers, issuing guidance and launching an asset management hub in an effort to improve understanding and clarify expectations.

The sector needs a collaborative approach to compliance. Regulators must work with companies. Within those companies, departments must work together. A key part of that collaboration is the sharing of information, and awareness of key expectations.

The Global Regulatory Intelligence database, provides a centralised resource for key regulatory insights and news. You can access content from our own experts, as well as information taken from around the industry.

Using our trends graph you can track the latest developments by sector and by year. This screenshot, for example, shows a breakdown of where the FCA principles were breached.

These are challenging times, and the size of the challenge should not be under-estimated. However, with the right support and backup – together with co-operation between key stakeholders, companies should have a good chance of navigating the choppy waters of compliance.