A City watchdog has warned financial services firms that it expects them to have updated their policies, refreshed their training and put in place rigorous oversight as traders routinely work from home.
The Financial Conduct Authority highlighted the risk around privately owned devices, that bankers could use to make personal trades based on confidential information, something much harder to do on a physical trading floor.
Staff working in financial services often work in stringent environments where phone calls are recorded and computer activity is monitored to help prevent market manipulation. Working from home makes this much harder for firms to detect.
Speaking at a virtual event yesterday, Julia Hoggett, director of market oversight at the FCA, warned firms that regulatory obligations had not gone away: “The ‘how’ may be changing, but the ‘what’ remains the same.”
She said: “We expect firms to have updated their policies, refreshed their training and put in place rigorous oversight reflecting the new environment – particularly regarding the risk of use of privately owned devices.
“These policies should be demonstrable to us and to your audit teams. It should go without saying that policies should prevent the use of privately owned devices for relevant activities where recording is not possible. New communication mechanisms, before they are used, should have controls in place where required and their use be approved by firm management.”
Hoggett said there is also a risk of less self-policing amongst front-office staff. “Consider a pre-crisis situation where a front office employee observes, or overhears, something questionable involving a colleague nearby.
“In normal, pre-crisis circumstances, we would hope and expect that the activity would be questioned, or reported to Compliance. With people working remotely, especially when staff are working from home, that type of first line control may be diminished, or absent.”
She stressed the importance that good culture plays within firms. “Staff should be in no doubt about the standards expected of them. And they should be in no doubt that these standards apply whether they are in the regular office, a disaster recovery site or at a makeshift workstation at home. Culture matters, and it matters most when the risks are highest.
“Having a culture that minimises the risk of poor conduct taking place in the first place remains critical. It is important that staff are conscious of the role they play as the first line of defence.”
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