The Regulator Heat is on: Maintaining Compliance Rigour After a Fine

Last week, the Financial Conduct Authority  (FCA) levied a second fine to a financial institution with respect to its anti-bribery and corruption controls. This institution had already spent time and money remediating the initial findings and paying regulatory fines.

Too often, firms become complacent once the regulatory heat is off and the dust has settled, leading to further regulatory scrutiny. Here we discuss a few tips on how to maintain rigour to ensure the heat stays off and the controls stay strong:

  1. Reliance on third parties or group companies can get you into hot water. Ensure you have robust controls to fully understand the risks yourselves and are exercising appropriate oversight when you are relying on others. Risks are still present when relying on group companies operating under the same policy. 
  2. Culture is the root cause of many compliance failures. In this case, the desire to win business at any cost, blatant bypassing of gifts and entertaining controls, and box ticking have come back to bite. Remember that the organisational compliance culture may not be the same across the whole group, especially in jurisdictions where financial crime risk management plays second fiddle to top-line growth or countries where facilitation payments are the norm.
  3. Your policy is a control. If people don’t follow it, your controls are broken.
  4. You should have known. The FCA reminds us of multiple guidance documents and previous enforcement actions that firms are expected to respond to.
  5. Don’t waste the money spent on significant fines, skilled person reviews, and remediation activities. Continue to invest in your financial crime framework and culture to mitigate the risk of regression.  

At Guidehouse Financial Services, we can assess and enhance the effectiveness of your firm’s anti-bribery and corruption framework.

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