The AML crackdown continues, this time targeting one of Britain’s biggest banks
The UK’s Financial Conduct Authority (FCA) has launched an investigation into Barclays for suspected ongoing failings in compliance and anti-money laundering (AML) systems.
The Financial Times reported that the FCA issued a notice last spring requiring an independent review of the bank’s financial crime detection and prevention systems. The review was triggered by concerns over the amount of know-your-customer (KYC) and AML cases at Barclays.
For firms involved in the financial markets, it is fairly easy to get caught up in illegal market abuse practices without even realising it. The temptation is great for staff members to trade on insider information or exploit the firm’s resources to try to manipulate the market. In many cases, the lines between what is acceptable and not are grey and unclear.
The European Union launched Market Abuse Regulation (MAR) legislation in 2016 in order to reduce market abuse and protect investors. MAR requires all EU Member States to criminalise insider trading, market manipulation, and the unlawful disclosure of inside information. The United Kingdom adopted EU MAR into UK law when it left the EU in 2020, but since 2021 has developed its own set of amendments separately from the EU.
Although MAR is an EU regulation, it applies to a wide variety of financial instruments traded anywhere in the world.
Our new course on fraud & market abuse gives staff members the tools to identify different types of fraudulent market activities, know the regulations surrounding them, and prevent potential abuses on an organisational and personal level.
The Financial Conduct Authority (FCA) requires all non-bank payment service providers (PSPs) to perform safeguarding procedures. These procedures are designed to make sure that payments owed to customers are not at risk in the unlikely event that the firm could suddenly go into liquidation or be otherwise unable to make a payment.
The most common safeguarding method, known as the segregation method, requires PSPs to make an immediate and clear separation between the money belonging to the customer and the fees taken by the PSP. This requires a constant process of separating funds into distinct and dedicated bank accounts, as well as recording and reconciling every transaction.
Our new course explains how safeguarding is done and what non-technical staff members need to know about it.
What the new consumer duty means for the regulated sector
The UK’s financial regulator, the FCA, have confirmed its plans to introduce a new Consumer Duty, with the requirements in force from 31 July 2023.
This new Consumer Duty will have a significant impact on the entire regulated sector.
The Consumer Duty forms part of the FCA’s transformation to become a more innovative, assertive and data-led regulator, and is a key part of the FCA’s new three-year strategy to improve outcomes for consumers and in markets throughout the UK. The FCA has confirmed it is embedding the Consumer Duty into its approach for authorisation, supervision and enforcement.
Since 2019, all FCA-regulated firms are required to comply with the Senior Managers and Certification Regime (known as SMCR, or SM&CR) a program designed to raise standards of conduct for everyone working in financial services. Formulated after the financial crisis of 2008, SMCR provides a framework for firms to:
Encourage all staff to take personal responsibility for their actions
Ensure a clear understanding of the division of responsibilities among senior managers in a firm
Improve conduct at all levels
VinciWorks’ new course, SMCR: The Senior Managers and Certification Regime, will provide you with the training you need to comply with SMCR requirements. It includes an in-depth look at each of the five Conduct Rules for general staff and the four Conduct Rules for Senior Managers.
The history of SMCR
Exploring the three pillars
The Senior Managers Regime
The Certification Regime
The Conduct Rules in depth
Who does this apply to?
SMCR in the organisation
How to report a breach
Provides short but comprehensive training
Includes practical examples and real-life case studies from the business world
Incorporates short, interactive assessments
Fully customisable for specific cases related to your business
The FCA requires financial firms to follow a formal process for receiving and handling customer complaints. That means that workers must be trained in all the different steps of this process, from recognising complaints to investigating them, responding to, and recording each complaint properly. Failure by employees to comply with the requirements of any of a variety of laws and standards relating to the industry can result in fines or worse.
VinciWorks’ new FCA Complaint handling course is designed to provide everything service employees need to know to comply with FCA requirements and, hopefully, please even the most dissatisfied customer.
A recent report estimated that 27.7m UK adults could be considered to be living in vulnerable circumstances, an increase of 15% in just a few months, with 2021 expected to show a further increase. This equates to 53% of the UK adult population – i.e., more than half.
Who are the vulnerable customers?
A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.
The FCA expects firms to demonstrate how they are ensuring vulnerable customers are treated fairly. This includes recording and monitoring to ensure the service provided to vulnerable customers is as good as those provided to other customers.
What is a vulnerable customer example?
Being vulnerable is not necessarily a life-long state: it can be long term, short term, or permanent. Vulnerability drivers could include the following examples:
Health – health conditions or illnesses that affect ability to carry out day-to-day tasks.
Life events – life events such as bereavement, job loss or relationship breakdown.
Resilience –low ability to withstand financial or emotional shocks.
Capability – low knowledge of financial matters or low confidence in managing money
Who do the FCA consider to be particularly vulnerable?
Certain life events can trigger additional or increasing vulnerabilities. Consumers who already have lower financial literacy or capacity may be even harder hit and unable to manage their finances.
How do you assist vulnerable customers?
You need to understand your customer base and target market so you can correctly identify potentially vulnerable consumers and those who are more likely to require support.
For example, if you advise on pensions or life insurance, your customer base is likely to be older. You must be more alert to signs of illness or disability.
You must also be aware of how your actions or inactions could increase vulnerability and cause harm. For example, not offering a customer who loses their source of income appropriate forbearance measures could lead to greater stress and anxiety, which in turn leads to the customer taking actions which are more harmful such as borrowing more to cover shortfalls.
The FCA expects your firm to have procedures in place to identify vulnerable customers, including if they access your services digitally, and to know how to respond appropriately.
VinciWorks new course: Vulnerable customers in financial services
Our new course, Vulnerable Clients in Financial Services, teaches users what makes people vulnerable, what the signs and characteristics of vulnerability are in specific target markets and customer bases, and how to provide an appropriate level of care to vulnerable customers.
Preparing for a new era in financial compliance with Sarbanes-Oxley (SOX)
In March 2021, the UK’s Department for Business, Energy and Strategy (BEIS) launched their much anticipated consultation: “Restoring trust in audit and corporate governance.” This consultation followed three significant reports into the operation of the UK’s financial services industry: the Sir John Kingman’s review, the Sir Donald Brydon review, and the CMA’s statutory audit market study.
In short, the consultation seeks to introduce a strengthened internal controls regime, similar to the Sarbanes-Oxley rules in the US which require directors to attest to the effectiveness of internal controls over financial reporting.