It’s almost one year on since the publication of the new Conduct Rules by the FCA, against which all firms’ must comply, and Conduct Risk Management is high on the agenda of Board’s and Senior Management.
As clearly stated by the FCA in their 2017/2018 Business plan, “focus on culture and governance in the financial services and its impact on individuals and firms’ conduct is a priority”. The FCA’s focus has additionally been reflected in the fines they have imposed against firms in 2017 with conduct failures and poor culture cited as the reasoning for fines exceeding GBP229Million.
It is therefore to be expected that the FCA’s focus on culture and conduct will continue to be priority in all their dealings, reviews and investigations going forward.
At the forefront of all recent and impending regulatory change is the drive to embed accountability and responsibility within all firms, and this is essential for improving culture and conduct at all levels. Prioritising the implementation of your firms Conduct Risk Management Framework will assist you in complying with other regulatory obligations, and help protect your firm from financial loss, regulatory fines and action, and reputational damage.
However, it has been difficult for many firms to manage the unprecedented level of regulatory change imposed in 2017, largely due to MiFID II, and the scheduled changes for 2018, with GDPR and SMR as key drivers.
You are almost certainly not alone if this has resulted in a delay in implementation of your Conduct Risk Management Framework, and setting and embedding of appropriate culture or governance changes. However, now is clearly the time to act.
1st Risk Solutions have significant experience in the design and implementation of effective, fit for purpose Conduct Risk Management Frameworks that are tailored to meet the needs of your firm.
A best practise Conduct Risk Management Framework would be comprised of the following 7 points:
- Clear, understood Conduct Risk Appetite Statement that drives the culture and ‘Tone from the top’
- A concise Conduct Risk Management Policy – setting out the accountabilities and responsibilities, and the elements that make up the Conduct Risk Management Framework- (e.g. culture, strategy, client outcomes and market integrity)
- An effective Governance Structure – with clear escalations, appropriate accountabilities for oversight, effective conduct risk reporting measures
- Conduct Risk identification and assessment across all processes within your firm
- Mitigating Key Controls that are both designed and operate effectively
- Processes to assess both individual’s behaviour, and the culture of the firm
- Training, training, and more training
If you would like to learn more about how 1st Risk Solutions can help your with your Conduct Risk Management needs, please click on the link below: