Compliance Digest - 8th March 2024
Welcome to this week’s Compliance Matters, my weekly digest of news and issues facing our industry.
The hallmarks of a future-fit workforce
FCA warns firms over anti-money laundering failings
FCA to investigate use of personal guarantees in certain small business lending
Life cover for business owners
Preparing your firm’s wind-down plan
The hallmarks of a future-fit workforce
In a speech at TheCityUK and Financial Services Skills Commission Future Skills Conference, Emily Shepperd, Chief Operating Officer and Executive Director of Authorisations at the FCA highlighted:
As financial services look to plug the skills gap and ensure its future competitiveness, it is important to tap into skills markets outside of London. This also helps firms to better reflect consumer demographics.
To attract and retain talent it is important for firms to build strong and healthy cultures that are inclusive, enabling diversity of thought and healthy challenge.
A highly skilled and agile workforce is better able to respond and adapt to changing world events and also new ways of working. Firms should look at ways to upskill their workforce as we grapple with the potential and challenges linked to AI.
The themes within the speech link back to consumer needs and the consumer duty as well as the diversity of the consumers and communities that our businesses serve.
FCA warns firms over anti-money laundering failings
Another recurrent theme from the FCA is the failure of firms to address financial crime controls.
In a news release, the FCA confirms that it has written to Annex 1 firms which include some lenders, safe custody providers, money brokers and financial leasing companies, undertake specified activities which mean they must be registered and supervised by the FCA for their compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). The Dear CEO letter sets out the FCA’s findings from its recent assessments of how firms are complying with money laundering regulations.
Although addressed to a particular sector, it is a timely reminder to all firms to review their anti-financial crime systems and controls and staff training that accompanies them.
FCA to investigate use of personal guarantees in certain small business lending
The FCA has today published a commitment to investigate the use of personal guarantees by lenders to support loans to certain small businesses. The steps come in response to a super-complaint from the Federation of Small Businesses (FSB).
This may be relevant to clients who are owners of small businesses and may have been impacted by this practice.
Life cover for business owners
How many advisers have clients who own small businesses? They ensure that they have sufficient pension provision, and surplus capital is invested in ISAs, GIAs and tax efficient investments where appropriate.
As an industry, we have become poor at writing protection. Here is a useful guide from Money Expert about the options available to business owners. It will serve as a good reminder and an aide memoire of what may be applicable to your clients. Open the conversation.
Preparing your firm’s wind down plan
The FCA has launched a new webpage which sets out when and how firms should prepare a wind-down plan. A typical wind-down plan should include:
Scenarios – a firm should identify all the scenarios that could lead to it no longer being viable. The FCA expects firms to have adequate governance and control processes and MI monitoring in place to support timely wind-down decision making;
Plan – a firm’s plan should steer it to wind down its business in an orderly manner once the firm has decided to stop the business (whether a voluntary decision or otherwise);
Resources assessment – this should include both the financial and non-financial resources needed to support an orderly wind-down;
Processes – firms should implement processes to identify and mitigate material risks or obstacles to winding down in an orderly manner. These might include, for example, issues that could lead to significant consumer harm or create significant adverse impacts on financial markets or other third parties.
Ian Ashleigh
