It would be fair to say that financial services reputation in the past has taken a real battering, and with good reason. There are many examples of misconduct within the industry that would be the makings of many a Hollywood movie, benchmark rate rigging, mis-spelling of products and market manipulation to name a few… and the FCA has worked tirelessly with the industry to tidy up its image and reputation and driven the efforts to regain public trust. And it would also be fair to say that these efforts alongside regulation and legislation have seen a reduction in the instances of financial misconduct that had seen the public and the taxpayer become the victim of financial loss.
But there is another element of misconduct that has become an equal focus for the regulator and that is non-financial misconduct. The regulator is actively using its powers to hold to account those who carry out activities that result in the requirements, values and expectations of regulatory regimes being compromised and this includes actions that are taken by individuals in a private capacity that are revealed to be criminal, immoral, and unethical by those carrying out regulated activity.
Jonathan Davidson, Executive Director of Supervision - Retail and Authorisations at the FCA said
“Over the last few years, we’ve increased our focus on non-financial misconduct because a culture where non-financial misconduct is tolerated is not healthy, it’s not safe and it’s not acceptable. We are taking this seriously and recently we prohibited 3 individuals from working in the financial services industry for non-financial misconduct.”
Those that are investigated and found to be in breach of regulation through their activities are being fined and even banned for life, from carrying out regulated activities or holding a certified role in the industry. One example of this enforcement action is clearly demonstrated in a case that involved 3 individuals who received lifetime bans from working in the financial services industry following findings that they are not fit and proper. Each of them had been convicted of serious non-financial indictable offences while working in the financial services industry. Further examples can be found here 2021 fines | FCA.
Such actions by the regulator have even been carried out through the pandemic and will continue, so firms need to be aware of this focus and reminded that it’s not just financial misconduct that the FCA works to eradicate.
There’s nothing like a pandemic to bring financial services to conduct into sharp public focus. With so many individuals and businesses requiring support from their financial services providers like never before, the conduct by the industry will be scrutinised and commented on by more people than ever before.
Jonathan Davidson also acknowledged that “This crisis has shown that the financial services sector can be trusted to fulfil its purpose of providing support to consumers and small businesses and keeping the economy going. Financial services have been part of the solution, rather than the problem.”
Whilst there have been some temporary guidance changes issued across the industry from the FCA, the fundamentals and rules of regimes such as SM&CR and the Conduct Rules remain steadfast, and firms must ensure that when they certify staff are ‘fit & proper’ that they do so with confidence and that they have no grounds to suspect that any of their staff are acting improperly.
What can firms do to ensure they can be confident their staff are ‘fit and proper’?
All firms must:
It is the responsibility of everyone who works in financial services to continue the momentum gained here and take it forward.
Our Access Learning courses for Financial Services includes a suite of eLearning to assist employees in maintaining ‘competence and capability'.
You can also take a look at our HR Software for Financial Services | The Access Group for more information on software to support hiring within financial services.