Mark Steward, FCA’s Executive Director of Enforcement and Market Oversight, has delivered a speech at NYU Law School entitled “Compliance, Culture and Evolving Regulatory Expectations“.
In it, he discusses how:
- the senior managers and certification regime (SMCR) has changed the way firms allocate responsibilities, align those responsibilities to relevant controls and ensure oversight as to how these controls operate down the line;
- the 5 Conduct Questions (5CQ), which start with ‘tone from the top’, are increasingly focusing on ‘tone from within’ which requires every person in a firm to be personally accountable and engaged;
- every employee of a regulated firm is subject to individual conduct rules, which impose broad obligations;
- the SMCR and 5CQ questions require firms to think about how a system or function might fail because of non-compliance, and they inject a sharper focus on conduct risk into the fabric of an organisation; and
- as demonstrated by enforcement cases, failures are not necessarily failures of compliance, but the consequence of choices made by individuals.