GUEST BLOG: Two months into new regulator – are you on the front foot?
We've been working with FSTP in numerous different ways for a while now, and we know they know their stuff when it comes to the challenges Learning & Development, Compliance and Senior Management face in achieving the right outcomes through people. Now two months into new FCA regulation of consumer credit, FSTP partner, Philippa Grocott, asks 'Are you on the front foot?' According to research by the Government’s Money Advice Service (MAS), nine million Britons are considered in serious debt and facing serious problems with debt, with just 1.5m having sought debt advice while 1.8m people don’t even acknowledge they are in debt. Having worked in the regulated financial services world for some considerable time, you know when the word ‘serious’ is used twice in one sentence by a government department there will be a very keen interest in all firms whose activities are in that area – Consumer Credit. It is almost two months since CCA firms have had the FCA as their regulator. Some firms were on the front foot before the 1st April 2014, taking a proactive approach to finding out what this would actually mean for them. Others have taken the more relaxed view, like the MD of one particular firm we’re aware of - “Regulators are all the same, tell them what they want to hear and they usually go away.” So which approach are you taking? The FCA is a very different regulator to the OFT. This one has teeth and bites. Or as Martin Wheatley, CEO of the FCA put it in regulatory speak, “We won’t shy away from taking tough, decisive action to make sure that the people who rely on these products are treated fairly. "There will be some firms that don’t get the message, or won’t play ball, those firms should know that we won’t let them carry on.” The new regulator has three operational objectives: 1. Securing an appropriate degree of protection for consumers 2. Protecting and enhancing the integrity of the UK financial system 3. Promoting effective competition in the interests of consumers in financial services markets To put it succinctly, if you can’t prove you have got the customers best interests at the heart of everything you do, the regulator is likely to take an intrusive and intensive interest in you, which could be extremely damaging to your bottom line. Beware of the dog! In the first four months of this year, the FCA fined firms a total of £104,884,500 for not adhering to practices that support their operational objectives. Almost £105m! I expect a number of stitches were required after those bites..... Ask yourself the following questions • Do you understand what it means in practical terms to have the FCA as your regulator? • Are you an approved person who holds a controlled function in your business? • As an approved person, are you aware of what your responsibilities are and what this means to you personally? • Are you comfortable with how to apply the 11 Principles for Business to your business? • Have you got the correct systems and controls to mitigate and manage conduct risk? • Do your employees understand what the regulator means by treating customers fairly? If you have answered no to any of these questions, or you don’t know whether you do or you don’t, then it’s important to remember that you’re not on your own in the compliance maze. Burying your head in the sand isn’t an option if you want your business to continue. But trying to make sense of things you may not fully understand can be extremely time and energy draining. We’ve been working closely with Unicorn in trying to make the process of consumer credit compliance as smooth as possible for those who need it. Helping businesses understand the regulator requirements and how to apply them practically is nothing new for neither ourselves nor Unicorn, in fact it is what we’ve both been doing for more years than we would probably care to remember! It doesn’t cost to have a conversation to understand how a blended learning solution could enable you to really appreciate what it means for your business to be regulated by the FCA. We don’t bite but we know a regulator who does! For more information visit our website or find our contact details here.