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FCA speech – compliance, culture and evolving regulatory expectations

Link(s): https://www.fca.org.uk/news/speeches/compliance-culture-and-evolving-regulatory-expectations-mark-steward

Context

Mark Steward the Executive Director of Enforcement and Market Oversight gave a speech at NYU Law School.

Key points to note

  • The Senior Managers Regime (SMR) has changed the way firms allocate responsibilities, align those responsibilities to relevant controls and ensure oversight as to how these controls operate down the line.
  • The 5 Conduct Questions (5CQ), which start with ‘tone from the top’, are increasingly focussing on ‘tone from within’ which requires every person in an organisation to be personally accountable and engaged.
  • Every employee of a regulated firm is subject to individual conduct rules, which impose broad obligations.
  • The SMR and 5CQ questions require firms to think about how a system or function might fail because of non-compliance, and they inject a sharper focus on conduct risk into the fabric of an organisation.
  • As demonstrated by enforcement cases, failures are not necessarily failures of compliance, but the consequence of choices made by individuals.

Next actions

None – for information only. However, firms should note that SMR is a key ongoing issue for the FCA.