Get back

As we inch along the road map to the lifting of Lockdown restrictions, our advice to clients is clear. Get back to the office. Get back as soon as you are able and in as full a form as possible.

This might seem counter-cultural and against the prevailing zeitgeist of “new normal”. It’s true that over the last year there have been benefits from working from home. The lack of commuting, the improved work-life balance and the greater efficiencies of time being used more effectively.

However these have somewhat faded as Lockdown has dragged on, especially since children have been back at school. And all the advantages offered by remote working have seemed increasingly at odds with the more intangible benefits of being physically present in the office.

FCA’s position on this has been consistently clear throughout this period. Repeating the government’s advice that people should work from home when they can, they have also said that the control environment at home must be at least equivalent to that at the office.

See, for example, Market Watch 66 from January 2021 and and Julia Hoggett’s earlier speech in October 2020.

It is for this reason that we are advising clients to return to the office. Everybody in financial services has done valiantly in installing electronic supervision systems and regular meetings on Zoom or Teams to ensure that staff are neither isolated nor unseen. The problem is that none of these systems work – at least, not in the full sense that office-based controls do.

The problem with remote supervision is that it assumes a vertical relationship between the supervised and the supervisor. It assumes that supervision is exercised by the manager making a regular call to the managed, by the managed having their work reviewed by the manager.

Whilst this is valuable, it’s only part of the picture. It ignores the premise that if we behave differently when we are being observed, when we are in the office we are in fact being observed by many more people than just our line manager.

Thus we are “managed” not just be the person above us in the hierarchy, but by all of those around us too. We are just as much managed by the peers sitting next to, opposite and behind us. And their oversight is critically missing in any WFH scenario.

It’s true that this may be an overly apocalyptic prescription. Firms who don’t deal on markets or whose transactions are longer in gestation may be less at risk from staff behaving differently at home from at work.

Such firms may seek to combine best of both home and office practice and only require office presence for a certain number of days of the week. But these firms will still miss out on those less tangible benefits from being at work 100% of the time – the shared culture, learning and mentoring which are so much easier when your colleagues are only a desk away.

During Lockdown, FCA’s supervisory efforts have naturally been focused on ensuring the resilience of the financial services sector. But they will soon return to normal.

We have every expectation that we will in due course see enforcement action against firms – and their senior managers – for breaches which took place during Lockdown, when staff were at home and, FCA will allege, not being appropriately supervised.

The best way to minimise this risk is to draw a line under this period. WFH was a phase we went through, but now its over. Get back. Get back to where you once belonged.

Underperforming, Overreaching

In the February issue of Compliance Monitor we speculated whether FCA was under resource strain, party brought about by its own non-financial misconduct agenda.

Everyone’s resource is finite, and one wonders whether the failures in the supervision of London Capital and Finance are to any extent due to FCA overstretch.

The Gloster Report made for grim reading, and the risk is that such failures of supervision will recur whilst FCA diverts resources to banning individuals who in fact have already been sent to prison.

Thrown into reverse

Firms who still have clients in the ongoing EU27 post Brexit know that the only way in which to deal with them is on a reverse solicitation basis. Essentially, they must come to you. Any attempt by the firm to contact these clients risks prejudicing that approach. This is not a universally applicable rule – local regulations will apply.

Nothing’s static

Amidst all of this hurly burly, it’s easy to overlook some of the more prosaic aspects of regulation.

All firms are required to attest to the accuracy of their static data, as displayed on the FCA Register, within 30 days of their accounting year end. The rule is set out in SUP 16.10.4. It takes a moment in Connect. This rule is now just past its first anniversary – so it must be nearly time for firms to make their attestation.


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At the point of balance