Earlier this year on April 1, the new Financial Conduct Authority (FCA) came into force for all companies that deal in financial services and advice. The idea of the changes were to make the consumer once more the focus of regulation and this means that for many businesses in the finance sector, more training will be required.
Being FCA compliant is not only necessary in many cases, it also offers up a competitive advantage, as it has what can be seen as a ‘badge of quality’. But what’s different about the FCA compared their predecessor the FSA and how is it likely to affect your company?
FCA focus and responsibilities
The FCA replace the FSA in bearing the responsibility of policing financial markets, protecting investors and ensuring that the 25,000 UK financial companies perform within regulatory requirements.
This is based on 3 main areas of focus and outcomes:
- That consumers can go to trusted financial firms and get services and products that are suitable for their needs
- Market and financial offerings are priced transparently and are stable and resilient, protecting investors from unnecessary losses
- Companies show integrity and work within their customer’s interest when running their business
The focus is now more on the consumer than it’s ever been, thanks to scandals hitting the financial sector with regard to mis-sold PPI, Payday Loans and so on. In order to increase consumer confidence in the market, the FCA have decided that regulation should take the consumer perspective, rather than that of the company.
What power does the FCA have?
The FCA has tools that help them to assess company products and services and to intervene if they feel these are lacking. This means that the regulators can suggest alternative products to companies that will more effectively meet the needs of the customer.
The FCA work in conjunction with the new Prudential Regulation Authority (PRA) and the old FSA handbook will now be effectively split in half with one half for each regulator.
Last month, a compliance officer and broker were fined a total of around £116,000 for allowing abuse of the financial market to take place, based on a 2010 case which saw the FSA implement a fine of over £6m on Rameshkumar Goenka, a private investor. It seems that he attempted to influence the closing price of securities on the London Stock Exchange.
Whilst you may think that this example is one that will never apply to you, it’s a distinct possibility that you will be fined if you, or any of your staff, fail to comply with regulations. In some cases, business leaders can even be banned from working in the financial industry, depending on how serious a breach is made.
Training is vital
This means that any business that ignores the need for training to ensure that staff know the regulations and how to protect consumers and their investments is playing with fire.
Employees that don’t have sufficient training are almost certain to make a mistake that could cost your business a serious amount of cash, or worse, your company. However, the worker can’t be blamed as according to the FCA compliance is your responsibility.
The FCA expect all finance professionals to:
- Treat consumers fairly
- Behave in such a way as to preserve the integrity of the sector
To help them carry this out, they will:
- Supervise businesses according to their size and nature
- Monitor products to ensure fair play
- Respond quickly to complaints
- Ensure that consumers affected badly are compensated by the offending company
With all of this in mind, no business that deals in financial services should question if they can afford to impost compliance training on staff, the question should really be, can they afford not to?
The short answer is no of course, all businesses in the sector have a duty to protect their customers and their employees and this means putting in place a firm training program that can be taken by all levels of employee. This isn’t something that need cost a lot in this day and age and the additional benefits offered by e-learning, can save a firm both time and money when it comes to training. Classroom training can be expensive for a number of reasons, not least in terms of time, but by using an e-learning platform, costs are reduced, students can learn at a pace that fits in with work commitments and employers can rest assured that they have FCA compliance covered.
How to get the training?
Traineasy are a provider of e-learning services and solutions and have a range of FCA Compliance courses including a new course on Anti-Money Laundering . E-Learning is cost effective way to deliver training within an organisation and brings with it many other benefits such as being able to manage a Compliance Program around your training. For more information please contact Sarah Lambie via email firstname.lastname@example.org