News

May16

Regulation Talks

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One of the greatest challenges for anyone responsible for compliance in a sizable business is to maintain a level of interest and focus on regulation and compliance from everyone across the business. The tendency, particularly among front office staff, to see compliance as entirely about PA dealing and AML training can be difficult to dispel, at least until an ARROW visit is threatened. And that may be too late.

The aim of the OWL Regulatory Talks & Presentations programme is to help Compliance functions to engage the attention of all staff and to demonstrate that involvement with regulatory development enables them to influence the ultimate shape of new procedures. This is not a training programme, although it may have the benefit of enhancing knowledge as well as awareness. But Talks & Presentations can certainly be intermingled with conventional training. With Compliance resources under constant pressure, it is often a major challenge to fulfil the day-job’s essential tasks without the added distraction of engaging those who show little interest. OWL specialises in providing support where it is most needed.

Talks and presentations cover a range of areas, including:

 UK and European regulatory structures: what difference will the changes make?

 More European directives: objectives of the latest reviews of UCITS, MiFID and the introduction of AIFMD

 FSA’s current hot topics

 Influencing the Regulator

 Coping with ARROW

T&P is provided either as a series or as one-off presentations. Hard copy of slides can be provided, but are sometimes seen as too formal. Presentations are designed to include engaging interaction, designed to maximise the impact on those attending.

 

Posted in: Miscellaneous
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May10

Remuneration code strikes UCITS

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In the eternal struggle between consistency and rectitude, consistency usually wins. Would you rather be consistent or right? When “both” is not an option, everyone says that they go for “right”, but what they do is go for consistent, even when that means consistently wrong.

No surprise then to see the European Commission produce a Remuneration Code in UCITS V which is the spitting image of the AIFMD version. Consistent? Yes. Right? No. And this time even less right than in AIFMD. What is the problem? It lies deeply embedded in the principle expressed in the words, “companies shall comply with the following principles in a way and to the extent that is appropriate to their size, internal organisation and the nature, scope and complexity of their activities…”. This is the famous proportionality provision, which is intended to allow latitude to regulators and firms to adopt the Remuneration Code in a way that fits with their systemic risk profile.

In these days of ever closer harmonisation, proportionality is one of the great saviours of sanity. Without the concept, European regulation would be even more expensive to bear and even further away from passing any sort of cost-benefit scrutiny. Although Brussels may not always enjoy the way that directives are transposed into national regulation, it is the judicious exercise of proportionality that has so far prevented the industry from voting with its feet.

Unfortunately, both for the industry here and for the regulators over the Channel, proportionality has its limitations. Once the directive contains reference to bonus deferral and to payment in shares, proportionality cannot completely wish them away. In theory, whoever finds himself at the high end of the risk scale has to comply with the whole gamut. Put that into the context of UCITS and you get some odd effects. The UCITS manager who delegates the portfolio management to a MiFID firm is potentially Tier 1; the MiFID firm, on the other hand, is almost certainly Tier 4 and exempt from the nasty bits of the Code. The drafting may be consistent; the outcome is not.

 

 

Posted in: Remuneration Code
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Apr5

FSA’s interest in Bribery

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Recently the FSA has started a major campaign to sharpen up compliance with the new Bribery Act. In this country we tend to be rather complacent about bribery, safe in the knowledge that there is less of it here than in almost any other country except Greenland. The FSA is determined to cajole the industry out of that complacency, and is using quite large boots to achieve it. Having fined Willis a few months ago for lack of anti-bribery controls, the FSA is now touring the bars looking for further suspects. There must be a good chance that they will have little difficulty in finding firms that have done little or nothing about the new requirements. The very fact that FSA now proposes to update the Bribery chapter in its very new Financial Crime Guide shows that they are developing their strategy at this point, gathering new evidence and recognising where they have not been sufficiently specific hitherto.

The points made in the recent press notice in which FSA announced the outcome of their early thematic review ( FSA review into anti-bribery and corruption systems and controls in investment banks and proposed new guidance for all firms ) include that the majority of firms in their sample, in relation to implementing anti-bribery controls, “had more work to do”. This rather elegant understatement was emphasised by the list of common weaknesses, which included that “most firms had not properly taken account of our rules covering bribery and corruption, either before the implementation of the Bribery Act 2010 or after”.

Firms which suspect that they too might have a little more work to do may wish to get in touch.

 

 

Posted in: FSA
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