Patrick Tibke’s Post

All Party Parliamentary Group - FCA criticism Over the next week or so we can expect a fair amount of public criticism of the regulator, following publication of a detailed report which is critical of the FCA (out tomorrow). The APPG group on fraud and financial services has its own webpage, so the current press release sets the scene for the report, in addition to the FT article here. Without commenting on the report itself (the highlights are likely to be made very public in coming days), given the make up of the group, it's suggestions and proposals, it is significant in the potential political pressure that could be welded to cause further upheavals in the world of regulation. With a new government in place, and further criticism of a lack of focus on growth within the Mansion House speech and a new FCA CEO due in 2025... could this report force greater change or scrutiny? Either way, the good ship FCA seems to float in ever turbulent waters... https://lnkd.in/eAsdcJGh

Is the FCA "incompetent at best, dishonest at worst"? A scathing report from the APPG on Investment Fraud and Fairer Financial Services has described the FCA as "incompetent", say it is "too often failing" to perform its functions and call for it to be overhauled. Bob Blackman, the co-chair, says that the FCA has been "blamed for doing too little too late - or nothing" to prevent wrongdoing. The report continues in the same vein, concluding that the FCA is "incompetent at best, dishonest at worst", that its actions were "slow and inadequate" and its leaders "opaque and unaccountable". As an example, the report says that the FCA had failed to properly investigate and act on information provided by whistleblowers, adding that the FCA's own transformation programme had "not worked". It appears that current and former staff have described the FCA as having a “defective culture” in which “errors and inaction" were "too common”. One one former FCA employee said they had experienced "the worst staff culture I have ever experienced in nearly 40 years" and another described having tried to raise "serious and challenging questions" but being "criticised, bullied and sidelined". Those who challenged a top-down "official line" on any given issue said by some current and former employees to have been "bullied and discriminated against, or even managed out". The FCA did not see the full report ahead of publication but a spokesperson told the Financial Times: “We sympathise with those who have lost out as a result of wrongdoing in financial services, however we strongly reject the characterisation of the organisation." On a positive note, the report has suggested reforms and these include: ·               Introducing a no tolerance policy for a lack of integrity ·               Establishing a supervisory council to review the FCA's effectiveness ·               Changing how the FCA is funded ·               Overhauling the way the FCA’s senior leadership team is appointed.

Should the regulated sector be expected to comply with the requirements of regulators, when they themselves are in the dock for misconduct and/or incompetence? This report about the Financial Conduct Authority is damning, as was the report looking into the conduct of the Solicitors Regulation Authority in the Axiom Ince scandal, yet both have refused to accept the main findings of the reports, with the latter saying the matter is now 'history'; I'm not sure the firm's clients and the solicitors that are now having to bale out the Compensation Fund will agree! Both the FCA and SRA are also AML supervisors for their sectors, but if they haven't got their own houses in order, what confidence can we have that they are capable of effectively supervising others in this key area? I am not suggesting or condoning non-compliance by those in the regulated sector, but if regulators want those they regulate to 'do the right thing' they must lead by good example, and be seen to be doing so. Any thoughts?

I don't often post my own independent views but I do strongly believe that the FCA has not thought through its intention to publish the names of firms under investigation. A few considerations include: At what stage of an investigation would the FCA decide to publish? Would they reveal exactly the nature and scope of the investigation? What evidence threshold would they adopt? If they decide on a high bar, then the implication could prejudice public perception of a firm's likely guilt. Conversely if they adopted a lower threshold, then many firms' reputation could suffer unjustly. Finally, the "no smoke without fire" principle means that any bank or financial institution would be hugely handicapped in trying to win or maintain crucial client confidence. Thoughts and comments welcome.

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The UK's capital markets are a vital economic driver and also a significant source of money laundering risk. This is a difficult area of risk for regulators and law enforcement to understand and tackle, and a new FCA report makes clear that the regulated sector has a key role to play. Financial services firms should focus on building more robust systems and controls and considering how AI could be better used as part of their compliance toolkit. Read more here. https://ow.ly/4qWJ50UORnJ #whitecase

Very insightful article hot off the press today, on how to spot illegal & unenforceable NDAs, and when/how to break them. Stephen M. Kohn, Founding Partner at Kohn, Kohn, & Colapinto and Chairman of the Board at the National Whistleblower Center, offers 3 key facts to know about illegal NDAs: 1️⃣ NDAs that restrict employees' rights to report crimes to government or regulatory agencies are NON-ENFORCEABLE. - NDAs like these, even if signed, may not just be entirely void, but oftentimes illegal in and of themselves, and companies that offer these NDAs may face sanctions & penalties. 2️⃣ NDAs that intimidate current/former employees from reporting misconduct to the govt are considered restrictions, and therefore ILLEGAL. Examples: - Requiring individuals to notify the company if they've been requested to provide info to govt agencies about potential violations - Requiring signed releases, upon receiving a credit/settlement from their bank, that prevent them from reporting to the govt - Limiting individuals' rights to recover incentives for providing info to the govt 3️⃣ Misconduct can also be reported ANONYMOUSLY - For example, under the Dodd Frank Act and the Defend Trade Secrets Act, individuals can file confidential reports, even trade secrets, to the SEC, who can initiate a full investigation even if reports were made anonymously. If the SEC sanctions the employer over $1 million, these individuals will be entitled to financial awards for reporting, with current SEC guidelines offering 10%-30% of the sanction amount. Note that individuals are only protected from retaliation if they report directly to the govt. "If you have already signed a restrictive NDA, remember: You do not lose your rights to blow the whistle to the government," says Stephen M. Kohn, "regardless of whether you first raise concerns internally." #NDA #EmployeeRights #Workplace #Compliance #Regulatory #Management #SEC #Whistleblower #Legal https://lnkd.in/eSixaVEa

What is an Ultimate Beneficial Owner (UBO)? A UBO is defined as someone who owns or controls more than 25% of a business's shares or voting rights or exercises control over the company or its management. #onestepahead #compliance #aml #kyc #ubo

The UK's capital markets are a vital economic driver and also a significant source of money laundering risk. This is a difficult area of risk for regulators and law enforcement to understand and tackle, and a new FCA report makes clear that the regulated sector has a key role to play. Financial services firms should focus on building more robust systems and controls and considering how AI could be better used as part of their compliance toolkit. Read more here. https://ow.ly/Ttx950UOYLt #whitecase

The UK's capital markets are a vital economic driver and also a significant source of money laundering risk. This is a difficult area of risk for regulators and law enforcement to understand and tackle, and a new FCA report makes clear that the regulated sector has a key role to play. Financial services firms should focus on building more robust systems and controls and considering how AI could be better used as part of their compliance toolkit. Read more here. https://ow.ly/cAtj50UPq1C #whitecase