Blog

FCA: Remote working expectations for firms

Graeme Stewart

Graeme Stewart

1 November 2021

In October, the FCA published their expectations for remote or hybrid working, which apply to existing firms, firms applying to be regulated and firms proposing to submit further applications. In this update, we will look only at existing firms. 

As we emerge from the pandemic, many firms will be introducing further changes to their normal working practices, following relaxations in Covid-19 rules. Some firms have all staff at home or all staff working remotely. The variable arrangements are almost indefinite! 

Whatever arrangements you have made, either on a temporary or permanent basis, we should all be aware of what the FCA expectations are, and what considerations we should be making as we emerge into the new ‘paradigm’. 

What existing firms should be planning for now 

The FCA has said that they will evaluate firms on a case-by-case basis. 

They expect that firms should be able to prove to them that any lack of a centralised location or remote working does not or is unlikely to: 

  • Affect the firm’s ability to meet and continue to meet the threshold conditions 
  • Prevent the FCA from receiving any information about a firm 

Our comments and observations 

Throughout the pandemic, the FCA has issued several questionnaires that required firms to report to the FCA their financial resilience. Thee FCA expected some firms to fail, and the questionnaires were designed to highlight any firm that may be experiencing financial difficulties so that a planned and orderly exit could be achieved.  

Recently, the FCA has turned its attention towards asking firms to interrogate their financial resilience and ask in particular: if holding the minimum capital adequacy is sufficient to meet any claims that could reasonably be expected. This is particularly important for firms who may have product exclusions or higher levels of excess within their PI policy.      

Paradigm recommend that the senior managers document such discussion and assessments in their senior managers meetings, and that a close watch is kept on this issue. 

In addition, firms should make sure there's nothing that reduces the accuracy of the FCA Register: for example, consumers are not able to contact the firm at the principal place of business shown on the register. 

Firms should ensure that any changes in working practices does not leave clients with no easy point of contact, and any changes to working practices from advisers are reflected in updating the FCA Directory. Neither should these changes: 

  • Affect the ability of the firm to oversee its functions, including any outsourced functions 
  • Cause detriment to consumers 
  • Increase the risk of financial crime 

Our comments and observations 

Firms will need to ensure that their governance arrangements remain robust, whatever working practices might be adopted.   

For example: 

  • The fact that some staff are working from home, does not mean that the frequency and content of normal supervision, is relaxed or interrupted.   
  • Staff should still have access to the firm’s policies that they may need to refer to as they work on a daily basis. 

Data Security is key, and firms should ensure that if data (physical or electronic) is being used remotely, it remains safely secured. Further information and support is within our cybercrime support hub.  

The FCA state that a firm must also prove that there is satisfactory planning: 

  • That there is a plan in place which has been reviewed before making any temporary arrangements permanent and is reviewed periodically to identify new risks. 
  • There is appropriate governance and oversight by senior managers under the SMCR and this governance is capable of being maintained. 
  • A firm can cascade policies and procedures to reduce any potential for financial crime arising from its working arrangements. 
  • An appropriate culture is in place and maintained in a remote working environment. 
  • Control functions such as risk, compliance and internal audit can be carried out effectively, such as listening to client calls or reviewing client files.  
  • The firm has robust systems and controls and IT infrastructure to fully support any new working conditions. 
  • A firm has considered the risk of data security if laptops etc, are used more frequently from home. 
  • The firm considers the effect on staff, including wellbeing, training and diversity and inclusion matters. 

Our comments and observations 

The emphasis is on the senior managers then, to consider what additional risks may result from any new working practices. For example: is there a risk that the usual case checking levels could not be delivered if a supervisor was in a different location to an adviser? 

It is also important that any changes to the firm’s governance arrangements, continue to be communicated clearly to any remote staff.  

Firms should also be on the lookout for any changes in staff behaviours, ensuring that their wellbeing is being managed through any disruption to normal working practices.  

Firm’s engagement with the FCA 

The FCA state that firms should consider if their details on the FS register need updating. 

They also reminder us, that the FCA has powers to visit any location where work is performed. 

Firms are reminded that any material changes to how a firm intends to operate must be notified to the FCA under Principle 11.  

Our comments and observations 

In summary, the FCA has provided a number of different considerations that firms should be aware of.  

Their expectations are that firms need to remain robust and compliant regardless of any changes brought about in working conditions as a result of the pandemic. 

The onus has very much been put on the senior managers within a firm for them to consider how the firm may need to adopt or adapt their governance arrangements to ensure on-going standards of compliance remain in place.  

The FCA has set the bar high and allude to the fact that that they will not accept the excuse of the pandemic for any failings within the firm, that may lead to customer detriment or harm. 

Reading this blog counts towards your CPD!

Click here to add this session to your Paradigm CPD log.


2 December 2021

Cyber crime update and reporting requirements


9 November 2021

Who will buy...?


1 November 2021

FCA: Remote working expectations for firms


18 October 2021

Remortgaging: Timing may not even matter this time


8 October 2021

Make stamp duty work for everyone


4 October 2021

Time to talk


1 October 2021

The FCA’s plans to tackle investment harm


27 September 2021

Lack of housing stock means brokers need to work client banks harder


3 September 2021

Let technology do the work in the fast-paced mortgage environment


2 September 2021

Time of new beginnings


18 August 2021

The proof of the pudding


12 August 2021

FCA pension transfer advice: don’t be confused by the label


12 August 2021

Time for a change?


26 July 2021

The engagement conundrum


26 July 2021

"I can’t do it all"


7 July 2021

Paused for breath


6 July 2021

SMCR part two - conduct questions


28 June 2021

Introducing a new us!


17 June 2021

Patches - what are they and why are they so important


17 June 2021

Multi-factor authentication - the simple solution


8 June 2021

SMCR part one - time to take stock


27 May 2021

A reminder of the 'good old bad old' days of protection tech


18 May 2021

Let's not consider any 'reduction' in these as some sort of victory


5 May 2021

Simple methods-calculating client profitability


30 April 2021

If the pandemic has been the mother of invention, it's time to carry on


22 April 2021

Opportunities abound in the market


19 April 2021

Early Movers are Shaping the 95% LTV Market


13 April 2021

Here's a conundrum


8 April 2021

Advice processes for vulnerable clients


29 March 2021

Vulnerable signs for advice firms to watch out for


5 March 2021

Lenders have not got to grips with how the pandemic impacted borrowers


2 March 2021

How Covid has changed our financial lives


2 March 2021

Supply needs to match demand


19 February 2021

Don't overlook product transfers


16 February 2021

Creating a plan for good CPD


5 February 2021

Stamp duty debate a black hole


2 February 2021

Industry wide levy is a head scratcher


29 January 2021

Long-term imposter product may finally become relevant as a high LTV option


27 January 2021

How to deal with a subject access request


12 January 2021

What we've learned from the FCA's advice reviews


7 January 2021

Uncertainty continues into 2021


Paradigm

THIS SITE IS FOR PROFESSIONAL INTERMEDIARY USE ONLY AND NOT FOR USE BY THE GENERAL PUBLIC.

APCC Member
Paradigm Consulting is a Member of the Association of Professional Compliance Consultants

Paradigm Consulting is a trading name of Paradigm Partners Ltd
Office address: Paradigm Partners Ltd, Paradigm House, Brooke Court, Wilmslow, Cheshire, SK9 3ND
Paradigm Partners Ltd is registered in England and Wales. No.09902499. Registered Office: As above

Paradigm Mortgage Services LLP
Office address: Wellington House, Starley Way, Birmingham International Park, Solihull, B37 7HB
Registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.

Paradigm Protect is a trading name of Paradigm Mortgage Services LLP
Office address: Wellington House, Starley Way, Birmingham International Park, Solihull, B37 7HB
Paradigm Mortgage Services LLP is registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.