• Victoria Bell

After you've gained FCA Authorisation - What to consider next?


Gaining FCA authorisation is a vital step for consumer credit firms. However, once you have completed the journey to authorisation, it’s equally important to consider the next stages. Ongoing compliance monitoring and having to consider how the firm will factor in adherence to evolving FCA themes such as vulnerability, firm culture and remuneration and incentives provides newly authorised firms with plenty to think about, and negotiating these expectations can feel like a minefield.

Policies and procedures that underpin the firm’s compliance may have been completed and shared with the FCA, but it’s just as important to ensure that the whole organisation is as familiar with them as the compliance department. Providing training is an excellent way to ensure that staff are aware of the rules, and are given the opportunity to practice what this means for their day-to-day duties.

Training isn't just a good idea for front-line staff, under the FCA's Senior Managers and Certification Regime, firms need to ensure that all those with specific responsibilities under the regime are fit and proper to undertake their responsibilities. Under the fit and proper assessments, evidence of knowledge of compliance, CPD and role-specific knowledge and skills will need to be provided. Once an individual has been assessed as fit and proper, firms will need to reassess them at least annually, making regular training sensible, and a useful part of a firm's reporting.

Since much compliance training has a reputation of being boring, it’s understandable that senior management might question the efficacy of training sessions that cover rules and regulation, often in the abstract. However, the benefits of comprehensive training more than outweigh the costs. Front line staff, who most visibly represent the firm, who understand the obligations and requirements will be better able to perform their duties with confidence, ensuring the best return for the firm.

Regulation in the consumer credit sector has tightened somewhat since the FCA were established. The FCA Handbook may set out most of what a firm needs to know about how to conduct its business, but it’s important to also pay attention to the consultations released periodically, both for awareness of what’s likely to be coming up in future and as valuable further insight to the broader environment of the sector today. That there have been 33 new consultations during 2017 alone highlights the proactive nature of the regulator; it’s vital that firms understand where this leaves their business, and that their staff are equipped to carry out their duties in a way that complies with the regulator’s requirements.

Recent FCA consultation on staff incentives shows how pervasive the links between culture and compliance are – in its consultation on remuneration and incentives, the FCA provides plenty of examples of good and bad practice in its aim to make incentives given to staff linked to better outcomes for customers. As an example, the FCA suggests that a call that includes a severe breach likely to result in customer detriment should not qualify that staff member for a bonus, regardless of their QA score on any other calls, ensuring that staff are conscious of any breaches, as well as just hitting best practice targets.

If one instance of bad practice should negate plenty of good customer outcomes, it is important to ensure that all staff, from front-line to senior management, are applying the FCA’s rules and principles throughout their tasks. Providing regular training, either in-house or outsourced to compliance experts, enables a firm to more easily demonstrate, through the supervision regime and reporting requirements, that they have met the FCAs standards and high-level principles. Quite apart from providing the regulator with an auditable example of compliance, regular staff training encourages both best practice and makes bad practices less likely, helping to avoid economic and reputational costs.

In short, a good training programme can:

  • Ensure standardisation of best practice throughout the firm

  • Help embed new regulatory requirements

  • Encourage and contribute to better workplace culture

  • Help to manage risks associated with bad practices

Whether organised in-house or externally, training should provide staff with both the knowledge that underpins the regulatory framework, and interpret this in a practical way so staff are clear on what adherence to regulation and ensuring good customer outcomes looks like in practice. Good compliance training for consumer credit firms should aim to do two things; to help avoid poor practices that could lead to a regulatory breach, and to firm up, exercise and develop best practice.

If you’re looking outside of the firm for training needs, selecting a provider that can tailor the learning to your firm’s specific requirements will ensure that your staff are able to more easily put their learning into practice. Whichever provider you select, they should offer content that takes into account the latest regulatory changes, and embeds learning via a variety of methods.

See our Training & Mentoring services to learn more about how RB Compliance Consultancy could help your firm.

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