Firms regulated by the United Kingdom’s Financial Conduct Authority should make sure their ducks are in a row now before the fledgling regulator potentially comes calling, a post in the FCPA Blog warned this week.
In a post written by Caroline Black and Anneka Randhawa, a partner and associate respectively with London law firm Dechert LLP who specialize in regulatory investigations, the authors point to evidence and recent comments from the FCA indicating the regulator will focus this year on financial crimes, including lapses in compliance and bribery controls. They also noted the pre-emptive nature of the FCA in assessing the systems and controls of firms it regulates.
Jamie Symington, director of investigations for the FCA, said during a securities regulation seminar last week in London that the authority will target bribery and other financial crimes, with an eye on companies’ controls, according to a report in the Financial Times. Symington said the FCA will refer cases involving potential criminal charges to the U.K.’s Serious Fraud Office, and he and others noted that regulators are boosting their cooperation on cases, including the complex rate-rigging scheme involving the London Interbank Offered Rate (Libor).
In its business plan for 2014/15, the FCA vowed to continue to push what it called industry-wide culture change. “If the first year has seen the concept of good conduct go to the top of the agenda in boardrooms across the city, in our second year we must push for this culture change to feed through from trading floors to High Street bank branches,” the plan said. Specific priorities cited included taking action against firms without effective risk controls and those running afoul of market conduct standards. The regulator also said it would extend its assessment of AML controls to smaller firms.
The FCPA Blog post noted that the FCA requires firms to be pro-active, adding that it is much easier for the FCA to take action against a regulated firm for systems or processes lapses than it is for the SFO to prove criminal charges against a firm.
“FCA-regulated organizations and their senior managers should therefore be taking immediate pro-active steps to ensure that their systems and controls for the prevention of corruption and financial crime are properly implemented and rigorously tested so that, if and when the FCA comes knocking, systems can be shown to be demonstrably effective,” Black and Randhawa wrote. “Any firm which ignores these warnings from the FCA does so at its peril.”