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Achieving compliance in a changing regulatory landscape

4 min read
Author Business Systems UK
Date Jun 1, 2011
Category Compliance

The Financial Services Authority (FSA) have raised their game in recent years tackling market abuse by targeting not just individuals but the firms implicated in cases. FSA fines issued in 2010 alone, reached £90 million and the trend seems set to continue. At a recent breakfast briefing, Business Systems invited Ian Mason, Partner at legal firm Baker & McKenzie LLP to highlight the challenges financial firms are facing when striving to achieve compliance.

Transaction Reporting
Transaction reporting is a hot topic right now as it is perceived as an easy ‘traffic light offence’- firms have either reported accurately, or they have not. If an internal review has been conducted raising red flags, but subsequently the red flags were not followed up on, or reports not properly documented, this could give cause for further investigation.

Where compliance meets technology
Technology does exist to address areas like transaction reporting, the key challenge for compliance departments however is ensuring that information is shared between the compliance and the IT team. As well as understanding all appropriate regulations, compliance teams need to understand the technology which monitors their processes and similarly IT should have visibility of the compliance background.

Any good market abuse monitoring system, according to Ian, should highlight suspicious transaction reports with parameters set correctly, so ideally not too broad or narrow in scope. These transactions should then be reviewed by the compliance department and a decision made whether or not to report. Ian suggests in general “if in doubt report it” as the consequences of failure to report are severe.

The changing regulatory landscape
In relation to the UK’s proposed new regulatory bodies, Ian comments “the transition from the FSA to the Financial Conduct Authority (FCA) is expected to be straightforward with the FCA retaining the same civil and criminal powers as the FSA currently enjoy. Additionally, virtually the entire FSA enforcement team is expected to transfer across to the FCA.”

In contrast the Prudential Regulatory Authority (PRA) will be aimed more at addressing the prudential financial issues and a paper recently published by the Bank of England and the FSA stated the PRA will be more proactive in regulation before issues reach the enforcement stage.

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If you want to find out more on how Business Systems can help you ensure compliance, feel free to contact us: 0800 458 2988, [email protected].