Corporate Governance and Conduct Risk relates to the accountability and responsibility of senior management in the performance of their duties.
The FCA places significant emphasis on the corporate governance standards firms operate by.
For the regulator, the ability of firms to demonstrate strong corporate governance and leadership is a key requirement.
More widely, the FCA has also highlighted its intention to focus on the cultural characteristics of firms – a key part of which is the culture and behaviour at senior management level – commonly known as ‘Conduct Risk’.
What is good Corporate Governance?
Senior management should have in place governance policies and procedures that meet the FCA’s rules and guidance whilst ensuring organisational goals are met.
Governance policies and procedures should act as a measure of board performance and help identify areas where the board is responsible and accountable for its actions.
What is Conduct Risk?
In addition to good corporate governance, increasingly regulators throughout Europe are keen for firms to change culture, moving away from commission based sales structures towards models which operate in the customer’s best interests for the long term.
Conduct Risk builds on the ‘Treating Customers Fairly’ regime and looks to not only provide protections at the point of sale, but on a long term basis throughout the client’s relationship with the company.
As a firm you are expected to:
- Have a strategy which puts the customer first and which produces long term sustainable profitability
- Develop products that operate in the interests of customers, ensuring they are understood by the target audience
- Have a culture throughout the firm which supports good, long term consumer outcomes, driven at board level and disseminated throughout the organisation
- Ensure products and services are appropriate, with regular stress testing taking place
How can we help?
Complyport’s experienced consultants can provide a range of services in this area, including:
- Providing bespoke, confidential consultancy advice on how best to structure your firm to meet the conduct requirements of the future
- Building and embedding a governance framework for conduct risk management
- Conducting regular reviews of your corporate governance arrangements and documentation in relation to FCA rules and guidance
- Assessing whether the requirements of applicable industry bodies are being met (if applicable)
- Undertaking mock FCA visits and interviews, providing detailed post visit reports
- Application of the UK Stewardship Code
Complyport’s corporate governance and due diligence services can be provided on an ongoing or ad hoc basis.
We also provide tailored training sessions to senior management in this crucially important area.
For more information see the case study, Governance, Risk and Compliance Review.