Financial services HR directors need to be on the board and heavily involved
in risk management if their companies are to avoid falling foul of the new
Financial Services Authority which starts operation later this year.
That is the claim made by PricewaterhouseCoopers in a report released last
week. It states that globalisation and the expansion of e-business has created
flatter, wider business structures that carry greater staff- oriented risks.
HR has to become more influential and business aware to tackle these risks
which include poor leadership, decision-making and training to avoid
investigation by the regulator.
From December the FSA will be scrutinising staff and management competence
much more closely as a central part of the financial regulator’s long-awaited
Nadine Majaro, partner of the client training group at PwC and co-author of
the report, called The Competent Company in the New Millennium, said,
"Competitive advantage is now clearly to be gained from internal control.
This means having a comprehensive approach to managing people risk.
"HR directors should now be working closely with their colleagues in
the risk management and compliance departments to integrate the important
contribution HR can make, particularly in the areas of organisational design
and performance management."
The report warns that if a financial company changes its products or market
strategy it is going to have to ensure its marketing, selling and advice
procedures, control systems and staff are managed effectively.
Alison Wilsher, head of training of the British Venture Capital Association,
said, "In most organisations HR has been on the sidelines. But this will
bring fund- amental change to HR in financial organisations.
"HR will now need to be at the centre of any organisation in a pivotal
role in order to meet the risk responsibilities of the new regulatory
environment. It provides HR with a huge platform to jump on, but HR will need
The report calls for HR to improve teamwork, communication and technical
ability through tools such as supervision, knowledge management and e-learning.
HR directors who fail to respond to the FSA’s new regulatory requirements
risk fines, suspension and jail, warned Majaro.
By Mike Broad