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Increasing fines for individuals
“...The first point to note is that credible deterrence is here to stay. The FCA will carry forward the Enforcement work of the FSA, maintaining and strengthening our outcomes. Where we do not see improvements from our actions, we will be willing to take tougher action – just as we have done in prosecuting insider dealing, in increasingly using our powers to prohibit individuals from the industry and in our continuing focus on senior management responsibility.
In 2011 we published notices imposing total fines of £66m. These included the highest fine on an individual to date... £6m for market manipulation... retail failings – £10.5m – against HSBC ...failures to maintain financial crime systems and controls - almost £7m on Willis... Five more firms were fined a total of £5m for client money failings and we also fined and banned an individual for his failings to oversee client money controls and risk management appropriately. We also banned 39 people from the industry and cancelled the permissions of 55 firms...”
Tracey McDermott, Acting FSA Enforcement Director, February 2012.
Regulation, risk and compliance are spoken about every day, but is your firm up to speed with regulatory standards?
Regulation is here to stay and being fine-tuned all the time. Whilst Boards have responsibility for the decisions they make, firms in the financial services industry also commit to upholding regulatory standards as part of the approval process.
The responsibilities of Boards towards regulation, risk and compliance cannot simply be delegated to compliance and dealt with at arms length any longer. Stakeholders are insisting that firms behave appropriately, whether that's the regulators or shareholders under the UK Corporate Governance Code or Stewardship Code. Boards are accountable for regulation, risk and compliance.
In 2013 the Financial Conduct Authority and the Prudential Regulatory Authority were put in place. Both have governance at the top of their agenda having concluded that failures in governance were at the root of the financial crisis. However, the role of these regulators have changed in terms of policy as the European Supervisory Authorities effectively make rules for Member States in the form of Directives.
"It needs to be recognised that currently, in respect of prudential regulation, and increasingly over the longer-term in respect of conduct, the rules will be made by Europe and the role of PRA and FCA will primarily be one of supervision and enforcement. Essentially, the UK is moving to become a ‘supervisory arm’ of Europe." Hector Sants, Chief Executive, FSA Feb 2012
The European system of financial supervisors (ESFS), consisting of three European Supervisory Authorities – a European Banking Authority, a European Securities and Markets Authority, and a European Insurance and Occupational Pensions Authority. They are tasked to:
- help restore confidence;
- contribute to the development of a single rulebook;
- solve problems with cross-border firms;
- prevent the build-up of risks that threaten the stability of the overall financial system.
Developments internationally continue to promote financial stability.
Clearly, regulation will continue to play a major part in setting governance standards. Our consultants keep up with these changes and help boards to establish how best to fit their particular business structures and board practices into ever more demanding criteria.
As well as designing open courses for and Non-Executive Directors we design bespoke events for firms that allow for debate and decision making about how the Board meets or could improve it's operations, performance and meet regulatory standards. More often Boards have to consider the regulatory demand of more than one jurisdiction and our highly experienced and up to date consultants facilitate these events and provide intelligent and relevant input.
Currently we find that Boards are thinking about:
BP&E Global - because Board Performance Matters