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5 things to-do before the year end

1. Brexit Readiness

EEA Incoming Firms

FCA has said that it intends to allow substituted compliance with the equivalent obligation in your firm's home state. This means that you do not have to do a massive rewrite and mapping of your controls frameworks to the FCA rules. However, it does mean that you must have evidence to show that you have properly considered which matters that were reserved to your home state regulator that you intend to continue to rely upon by way of substituted compliance.

Onshoring of EU Regulations in the UK

The UK is legislating to bring EU regulations into the UK. Whilst there is a deadline of end Q1 2022 to comply with most of these new obligations, some apply from end of the transition period i.e. 31 December 2020. You should review the FCA's annex to identify which new rules you will need to be complying with next year. You will also need to be amending your Transaction Reporting to FCA FIRDS and not ESMA.

2. Incorporate the assessment of fitness and propriety with the performance review

The extension of the deadline from 9 December 2020 to 31 March 2021 for SMCR extension firms allows you time to align the first assessment of fitness and propriety of your Certified Persons with your annual performance assessments. It is much easier to carry out the fitness and propriety assessment at the same time as doing the annual performance review.

Key things to remember are to make sure the review is documented and covers all three components of the F&P test. To be fair to your people you should ensure it is consistent across line managers which means providing a template and training to line managers. You should consider including guidance on what is and is not acceptable, incorporating messages about the consequences of not meeting standards such as training for the trader that isn’t taking risk through to reductions to variable pay for breaches.

3. Document action taken in response to the various Dear CEO letters

FCA has outlined its supervisory expectations and strategy in a number of Dear CEO letters sent out in 2019 and 2020. It is really important to document the review you carried out and the actions that you have taken in response to a Dear CEO letter.

Always make sure that your Board has had sight of the Dear CEO letter and agreed your risk mitigation plan. If your review has identified breaches then check which are notifiable, and never wait until you’ve concluded your investigation to notify, always alert FCA early and provide them with subsequent updates.

4. Refresh your Market Abuse controls

Deterring, detecting and pursuing market abuse remains key to enhancing market integrity and protecting consumers and is one of FCA’s priority outcomes for the Wholesale Sector. A top tip is to read across what you see in FCA publications to an FCA priority.

For example, in Market Watch 56 FCA expressed concern about the lack of written policies and procedures to handle conflicts of interest. By now you should have read across this concern about the need to have policies and procedures to all your market abuse controls and ensured that you have clearly documented policies and procedures.

5. Take a fresh look at your training program

There is always a long list of regulatory compliance related training and often an annual debate between Compliance and the business about what to prioritise. Remote working has made it more challenging to deliver the traditional classroom style training sessions so consider different approaches such as webinar based training sessions. Where the list is too great for structured learning you could consider awareness campaigns: try screensavers or wallpapers instead of posters to keep the message fresh.


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