Meet the Regulator

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It is probably fair to say that many firms and their employees would not particularly relish the opportunity of a face-to-face meeting with the regulator. Even though most firms will have no skeleton in the cupboard spookier than “room for some improvement here” any form of close contact with the regulator is likely to cause some level of anxiety for those who must get close to it. 

Firms will know already that the regulator has committed to being “more innovative, assertive and adaptive”. However, regulatory contact is just a normal facet of being part of a regulated community, and it can happen at any time for example, as part of normal communications with a supervisory contact or as part of a thematic engagement. In a bid to calm the nerves of and reassure any reader who might have a contact with the regulator looming in the diary, here are some practical tips for you to think about, particularly if you are a Senior Manager or Certified Individual in your business:

• Be prepared: 
  • read any relevant correspondence carefully so that you understand the reason for the engagement;
  • speak to relevant people from ‘top to bottom’ particularly those that know and understand the subject matter of the engagement and the relevant laws, regulations, and guidance, including key materials sent by the regulator such as Dear CEO letters; 
  • if called for interview, consider practising and seeking help on how to prepare yourself for the types of questions you might be facing; and
  • prepare relevant documentation and other forms of evidence and information, including anything that might have been archived.
• Know your business:
  • know your systems and controls;
  • understand your resources;
  • know your risks and any weaknesses or blind spots;
  • do your planning and horizon scanning;
  • speak to any legal and compliance colleagues in your business for advice; and
  • involve your board and senior management in the planning and other arrangements.
• Be up to date:
  • be sure to have read any output from the regulator on the subject of the engagement such as relevant updates to website pages and ‘good and poor practice’ notices and information, again including key materials such as Dear CEO letters; and
  • check and update any relevant internal training records.
• Be open:
  • be open and honest in your communications, both written and verbal, with the regulator (there are recent examples of FCA enforcement cases where the importance of this is very clear);
  • remember that it is acceptable, in fact normal, to have room for improvement in some areas; and
  • for any areas that might require attention, think of a plan to include what the remedy or fix might be and how long it will take to effect it.
• Seek clarification where needed:
  • do not be afraid of asking for clarification of any points, or questions, that you do not fully understand or might not be entirely clear; and
  • do not feel pressured to answer a question that you do not fully understand without asking for the opportunity to get help from an appropriate colleague.
• Follow up promptly:
  • if there are some things that you need more time to deal with, maybe the answer to a question or locating further documents following an information request, be sure to do this within any agreed time limit; and
  • be comprehensive in any follow up that you have to make. 

Remember, that you know and understand your job, and you are experienced and competent at it. The contact that you must make with the regulator is just part of “business as usual” and even the regulator, intimidating as they may seem, is just a regular person doing their day-to-day job. Do your best, accept that perfect does not exist, and that we are all in an iterative process of working towards it. Keep calm, be honest, and carry on!

Kerry and Matt are both part of our Funds and Financial Regulation team. They have both spent time in private practice, in-house in industry and at financial services regulators. They are part of what gives our specialist team a unique and genuine sector insight into financial services law. You can meet the rest of the team here.