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More recently, the majority of established financial service businesses seem to have embraced a good outcomes and conduct drive. They appear to act responsibly, setting standards across their firms and are driving a positive culture within the business that enables them to put customers at the heart of the business and address their regulatory obligations.


However, this is a highly complex industry and we’ve been through some extremely challenging times. It feels fair, then, to assess that even within the most focused firms, the sheer scale, complexity, and progressive nature of the industry, continues to ensure ongoing focus and evolving values are paramount to stay aligned to the protection of consumers, markets, and firms.


So, how do we maintain high standards?


Firms can be in common phases – for example as a start-up, ongoing organic/acquisitional growth, or within an ongoing evolvement strategy and perhaps, with larger firms all areas may be in play, across their business lifetime. If you then layer products, services, customer types, asset classes, markets, geographies, multiple regulatory regimes, and product governance, you can very easily start to comprehend the challenges firms face.


Remaining in control is critical – having governance in place across all dynamics and functional areas is critical for identification of risk triggers and thresholds that give rise to indications enabling management teams to make informed and accurate decisions in a timely manner.


Roles, responsibilities, and culture to drive positive conduct is also paramount. With the new consumer duty, champions should be in place at board and executive level and trickle down appropriately through the business to ensure customer interests and protections are sufficiently provided for and standards exist. This should comprise of embedded process, controls, and oversight to deliver, and the ability to evidence that approach and conduct, at any point in time. Misconduct should be dealt with promptly and controls need to be in place to prevent harm to customers, markets, and firms, wherever the risk touchpoints have been identified. Risk management is extremely important for these purposes.


Managing the risk


There are some periods within a firm’s lifecycle when risks ebb and flow, becoming more prevalent within the particular period that the firm resides. For example, with a start-up, the establishment of a risk and control environment, framework, and oversight, with metrics to manage the firm’s footprint is highly correlated to their ability to gain confidence from and underpin their permissions from regulators. 


It’s critical to establish strong ethics and cement positive culture across the organisation at the commencement, continuing past inception, right through to growth. Ongoing oversight and evolution of this framework and elements is always really important, setting the tone to commence and manage to the standards throughout, continuing to challenge standards and improve them as the firm grows.


Working with the regulators


It’s not unusual for firms to face challenges at onset in gaining regulator confidence and their requisite permissions to launch. While it may be tempting to start with a very manual process of spreadsheet oversight, investment in this area can rapidly excel firms to higher confidence and to some extent help future proof the business. Automated, resilient solutions can become cultural enablers with governance capacity and capability drivers – giving regulators confidence in the firm’s approach and solutions.


The FCA has a dedicated area of their support focused on Early and High Growth Oversight. This is underpinned by a number of innovation strategies and supervision areas to help firms understand and meet their regulatory obligations, with some useful pointers, topics, and suggestions for firms.


The FCA have assessed their interactions with start-up firms in this cohort and found a number of common themes and areas in newly authorised firms:



The links will direct you to the details within each topic above, but what’s clear is firms at onset benefit from additional support and clarification of their obligations. This helps to build in highly-correlated governance and strong cultural ethics, with customer focus aiding the good outcomes expected by the regulator.


A recent speech by the FCA – ‘From Zeroes to Heroes’ – describes ‘doing the right thing leads to the right results’ and this discusses culture, recent events, sector-related challenges, and ESG focus. Interestingly, this concludes that the ‘G’ (Governance) aspects of ESG are less well defined and focused on.


Enhancing your conduct and oversight


Conduct and focus on governance for firms can dramatically increase their ability to identify risk triggers and headroom, driving decision-making ability to prevent harm across customers, markets, and firms and that can only be a good thing. Doing this manually (while conceivably possible) is obviously a challenge and not fully sustainable as firms grow.


Manual process is a risk in itself and raises operational risk through reduced capacity and capability in equal measure – you wouldn’t in this day and age manage your bank account with an ink quill and blotter, so why leave business management to manual means?


Looking to the future


At Grath we see that our clients and the majority of the financial services arena have high morals, standards, and ethics, all striving for strong governance with clear conduct and control environments. This is accompanied by continuous assessment and improvement to ensure they maintain optimal customer-focused protection, conditions, and operating practices.


In general terms, we’d all agree that we want to ensure the industry remains in good shape even after we all leave it. That’s why at Grath we’re helping firms to support the ‘G’ of the ESG movement and the consumer focus of the forthcoming duty. We’re also supporting firms to embrace their innovative nature with solutions that propel them into a bright and secure future, where customers can be confident and achieve their objectives with an industry that is unquestioningly on their side.


Want to build a financial services culture to be proud of?


If you’d like to know how Grath’s technology can help you automate and embrace your regulatory obligations from inception, to growth, and beyond, then we’d love to talk.


Get in touch with us at Grath | Reinventing Regulatory Compliance

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