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Conduct Risk: Who is Responsible?

“Conduct risk” has been a top priority for the FCA ever since their formation in 2013, but to many it’s still a confusing and vague concept.  The FCA have defined it as “the risk that firm behaviours will result in poor outcomes for customers”, one suggested explanation from Thomson Reuters 13/14 Conduct Risk survey is that it is “the risk that detriment is caused to our customers, clients, counterparties and their employees because of inappropriate judgement in the execution of our business activities”.

So who is responsible for something so wide ranging? When discussing conduct risk we tend to talk a lot about company “culture” and the need to have the right kind of culture and failings of a company’s culture.  The Institute of Risk Management (in their 2012 paper ‘Risk Culture: Under the Microscope Guidance for Boards’)  say that “the culture of a group arises from the repeated behaviour of its members. The behaviour of the group and its constituent individuals is shaped by their underlying attitudes. Both behaviour and attitudes are influenced by the prevailing culture of the group.”

At a recent event held in association with our business partners Crowe Global Risk Consulting, John Thirlwell spoke about ‘culture’ not being something that your compliance management team can quickly fix, it’s a question of how everyone in your organisation behaves on a day to day basis, especially the people at the top. If your senior management team, with all their power and influence, are behaving unethically, they can’t expect any better from the staff beneath them. Thirlwell went on to say that conduct risk shouldn’t be monitored and managed purely for regulation’s sake, good conduct should be something that we do regardless because it’s the right thing to do.

Compliance management obviously play an important role in monitoring but if we’re talking about people’s personal conduct on a day to day basis, who does that fall to?  If we’re talking about people’s everyday behaviour and moral standing, are HR responsible? Or is it the line managers that people are reporting to? Or should the board be held accountable for embedding the right kind of culture and modelling good conduct? You can’t expect a company with 5000 employees to have a board member sat in every single interview, or to have an HR representative in every meeting, or to have a compliance officer tracking everyone’s behaviour all day.  It falls then to every person within an organisation to make sure they individually are doing the right thing and enacting a positive culture.

The question you need to ask then is not ‘how can we make sure we’re compliant?’ but instead ‘who controls the culture in our company?’ and ‘am I making positive contributions to that culture?

Lynsey Moore

[This post originally appeared on Lynsey’s LinkedIn]

For more risk-related reading why not try – “The Modern CRO: It’s All About Risk”

Or click here to see all of our blog posts on Culture & Conduct Risk.

Do You Need a Bank When You Have An App?

Financial Technology has grown so much over the last few years that it now has a standardised, globally understood abbreviation: FinTech. I’m sure you’ve heard by now that FinTech is saving and/or destroying the banking industry, depending on who you listen to. FinTech is undeniably a massive revolution in banking; banks have always been good at utilising technology once it exists but have rarely been as good at keeping up with the absolute forefront of new developments, and knowing how to use them to best suit the customer.

What do we really mean by the term? FinTech covers multiple different fields, all of which are changing the landscape of modern banking – peer-to-peer lending solutions such as Funding Circle and Lendable, investment platforms both retail (Nutmeg, Kapitall) and institutional (SumZero, Contix) personal finance providers like Credit Karma and CoverHound,  startups like Starling Bank who want to provide complete branchless banking via an app and perhaps the biggest group – payment providers, from the long-established PayPal to the recently popular Venmo and new challengers like GoCardless, Transferwise and Astropay.

New, start-up FinTech solutions are allowing people to get the kind of instant, personalized, portable solution to banking that they’ve come to expect from almost every other industry for a long time now. Why stand in line at a bank (that you’ve already had to take the time to physically go to) when you could open an account right from your sofa with a few taps on your phone? The appeal of the all-online all-app banking experience is very clear.

With so many of these new FinTech companies doing so well, it’s easy to see why some view this as an attack on big bank’s traditional markets, with some industry figures starting to worry that if they don’t move fast they could lose out on a huge number of younger customers. Established banks have recognised this risk with many adopting strategies to give them a foothold in the FinTech market.  Many (Lloyds, Wells Fargo, Barclays, Bank of Ireland, Bank Leumi, many more) are running startup programmes to incubate FinTech companies, with a smaller percentage taking the direct route and outright acquiring FinTech companies (Citi, Barclays again) or partnering with them (HSBC, Santander).  [This piece by Avinash Swamy has a great breakdown of who’s doing what]

But will it be enough? There’s a very real possibility of permanently losing a significant portion of their customer base to FinTech companies if they don’t provide solutions that people find, at the very least, as quick and convenient as their new competitors. The age when it was accepted that everyone needed a bank account with a high street bank and you’d have to go into a branch occasionally is coming to an end, and fast.

For more on the Fintech revolution and how customers are responding, read our later blog post here

Careers With Kind

Kind Consultancy is a bespoke Search and Selection Practice that is modern, dynamic and innovative. We have experienced a huge amount of success within our specialist markets due to our focus, experience and entrepreneurial flair.

Why Choose Kind?

  • We are specialists in what we do, we only work in markets that we know, understand and have first hand experience in.
  • We are forward-thinking and actively encourage new ideas from all members of the team
  • We empower and encourage you to think outside the box and make your own decisions
  • We provide a detailed induction process and high-quality continuous training programmes
  • We have a reward scheme that recognises your individual performance, your consistency and your contribution to the wider team
  • We are an ambitious organisation that is growing organically and we offer the opportunity to develop your skills and experience further and to play a direct role in Kind’s on-going success story.

If you are passionate about your own long-term career, have experience in developing new business and want to be part of a growing organisation, send an up to date CV to info at kind consultancy dot com or call 01216432100.

The Number One Reason You’re Losing Your Best Candidates?

It’s just a matter of time.

“49 percent of candidates declined job offers because they accepted an offer from another company during the second half of [2014]”. “The ‘availability cycle’ of a potential recruit has decreased to just 24 hours, rather than the 2-3 weeks that businesses became accustomed to during the recession.”

Over the last few months, recruitment blogs have been rife with panicked headlines about losing candidates during the hiring process – and if you’re not worrying about it, you probably should be. In 2015 the recruitment market is candidate led, with an abundance of opportunities but a shortage of skills, putting the power firmly in the hands of strong candidates. And if your company has a 7 stage interview process while your competitor is doing one interview and then making an offer the same week – why would any candidate wait for you?

Using a specialist search firm (such as ourselves) is a good first step, we have the time and resources to keep track of a candidate and manage their expectations – but if another offer lands in front of them while we’re waiting to hear back from you, there’s not much anyone can do.

Don’t let a sloppy, bloated hiring process stop you from getting the best people for your positions.

  • Make sure everyone who’s a part of the process knows from the very start about the necessary timeframe – it shouldn’t be too hard to convince your boss that it’s good for him to get a better quality candidate into the vacancy as soon as possible. Get the budget signed off before you start looking, not once you think you’ve got the right person.
  • Think about whether the role really requires you to meet the candidate in person, or if you can save everyone time by doing a video interview via Skype or a similar service.
  • Don’t be afraid to ask candidates if they have other offers or interviews happening, make sure you know what you need to stay ahead of.
  • If completely unavoidable complications and delays do arise – be honest about it. If you’re not talking to your search consultant, they have nothing to tell the candidate and the candidate has no way of knowing if they’re still in the process.

If you’re passionate about your organisation and are serious about hiring the right person, companies need to work with us in order to keep the process flowing and time frames as short as possible. Contact us on info@kindconsultancy.com or 01216432100 for a confidential discussion of your recruitment needs.

Mathew Kind

[This article first appeared on Matt’s LinkedIn. To make sure you don’t miss any posts from the Kind team, follow our company page]

Why the Banking Sector Should Be Worried About the Skills Shortage (and How We Can Help)

Writing in the Telegraph earlier this month, Dame and Lord McFell of the Banking Standards Board acknowledged that “trust in the banking system has been damaged” but encouraged the public to “not lose sight of the fact that that a healthy, vibrant and open economy like the UK needs well-run banks and building societies that serve the needs of all”, adding that “millions… rely on the banking system every day and the jobs of over 500,000 people across the UK depend on it”.

This month those 500,000 or so people are very much in demand – with the most recent KPMG/REC report on jobs showing vacancies rising to a five-month high as candidate availability fell at its fastest rate since the start of the year. Those numbers are for all industries but the report noted that the demand for Finance staff was particularly high. Commenting on the report, REC’s chief executive Kevin Green said  “employers need to realise that people are deciding to change jobs because they can earn more than in their current job. Increases in starting salary offers are being driven by skills and talent shortages across the economy, and businesses are going to have to think hard about retaining scarce resource” and “almost a third of recruiters say that starting salaries have increased in comparison to last month, and we’ve seen another increase in the number of people that have found a new job via a recruiter.”

As a recruiter specialising in executive roles within financial services, all of this echoes my own first hand experienced. The skills shortage has been made particularly obvious to me by more and more clients inviting us to provide retained solutions as a standalone agency than ever before.

Kind Consultancy as an organisation has the skills, experience and capability to uncover truly exceptional candidates. We continually identify who the best in the market is and build relationships with such candidates to understand their skills and long term objectives so that we can match them to exactly the right opportunity when it presents itself.

Should an organisation have a requirement where we don’t already know the perfect person, we have the ability to map out the market in-depth. We work equally closely with our clients to make sure we understand their culture, vision and the longer-term objectives and making sure our candidates mirror this.  Many non-specialist and internal recruitment teams don’t have the time, experience or resources to do any of this, and as highly skilled candidates become more sought after in the market, simply matching a skillset to a job profile will not be enough.

Contact Kind Consultancy (https://kindconsultancy.com/ or 0121 643 2100) if you have any requirements you want to discuss.

[Sources: 1, 2, 3. Photo source.]

 

Preventing Financial Crime

For their 2015/16 Business Plan, the FCA have added financial crime to their list of the top seven risks facing the finance industry, replacing house price growth. It’s not particularly surprising, 2014 was a bad year for high profile, high visibility financial crime cases and the industry is under public and media pressure to do more. In January, the Director General of the National Crime Agency described the British financial system as “particularly attractive” for criminals due to “the high transaction volume, developed financial services industry and [the] political stability of the UK” and that “the involvement of a small minority of complicit, negligent or unwitting professionals in the financial, legal and accountancy sectors, also facilitates money laundering – and unfairly damages the reputation of the large majority of professionals in those sectors.”

The ‘negligent’ and ‘unwitting’ are in the FCA’s firing line, with their Business Plan making repeated mention of the need for “systems and controls” to protect against financial crime, and they promise to implement an enhanced anti-money laundering supervision strategy including continuing their Systemic Anti-Money Laundering Programme which assesses AML and ABC controls at major firms. They’ll also continue to visit smaller firms they believe to be at risk of being exposed to financial crime, a strategy that remains important following their report late last year that found “many small banks and commercial insurance intermediaries fail to effectively manage financial crime risk”. They’re also planning to embed better arrangements and support for whistleblowers and to take a more active role in monitoring pension fraud.

Here at Kind, we’ve partnered with a global risk consultancy firm to help provide financial crime prevention solutions for our clients. If you’re concerned about adapting to new regulations or are worried that your processes may make you susceptible to financial crime, contact me or call the office (on 0121 643 2100) for a more detailed conversation on the solutions we offer and how they can be tailored to suit your needs.

[Sources: 1, 2, 3. Photo by Alan Cleaver]

Lynsey Moore
(This article originally appeared on Lynsey’s LinkedIn)

This post is from 2015 but Financial Crime continues to be a key issue – read our most recent piece on the FCA’s plans for this year and beyond

Tech Risk and Reward

After a year of high profile cyber-security breaches, the 2015 FTSE350 Cyber Governance Health Check found 89% of board members of Britain’s leading companies regarding cyber risks as ‘moderately or extremely important’ and over 58% expecting the risk to increase over the next year. Regulatory compliance for IT can be an expensive undertaking, but it will definitely cost less than the fines, time and lost revenue that comes with a cyber security breach.

Even if your company has an information security policy in place, they need to make sure all employees are following it – and they need to keep that policy up to date. Sony could have saved themselves a lot of money (and a huge public embarrassment) if their own IT director was as concerned about information securityas George Clooney was. One of the lawsuits filed by ex-Sony employees alleged that “despite weaknesses that it has known about for years, Sony made a ‘business decision to accept the risk’ of losses associated with being hacked”, a terrible decision which continues to cost them a lot of money.

Companies that follow the regulations set out by external organizations are more secure, more likely to survive any investigation and they get all the benefits of being compliant, including protecting their reputation. First though, you need to understand what your company’s specific IT weaknesses are, and what cyber threats are would affect your overall business strategy. If you try to meet regulations and policies without considering what needs to be applied for your circumstances it will end up costing more in the long term and of course working less effectively.

Many companies have to deal with an array of different policies and regulations regarding IT and data, which is challenging for any business especially if the IT staff changes or if the company outsources its IT systems and lacks a good understanding of tech issues. Some compliance rules need data to be kept for a specific period of time and then deleted – if there’s no permanent, long term IT staff it can be easy for time sensitive data storage situations to be forgotten.

The most important thing to make regulatory compliance work is evaluation and assessment. If you don’t understand where your company’s IT weaknesses are, it’ll be nearly impossible to implement the best practices. The 2015 FTSE Cyber Governance Health Check says over 90% of UK company board members think they have “a clear or acceptable understanding” of what their companies key information and data assets are – but 65% of them “rarely or never review” their data assets and information to “confirm the legal, ethical and security implications of retaining them”.

If you’re unsure whether your organization’s processes are compliant and your data is safe, contact Kind Consultancy and we’ll connect you to an expert to give your company a tech security health check. It’s not just ‘better’ to be safe than sorry, it’s also more profitable.

Lynsey Moore

[This article originally appeared on Lynsey’s LinkedIn.]

Five Signs the Banking Sector is Already Having a Good Year

  1. The labour market has always been one of the best indicators of economic health and ours is getting better and better according to the Bank of England’s Inflation Report for February. Unemployment has fallen since November and employment growth is expected to return to above-average by the end of the quarter. Employment opportunities in today’s market are showing higher than pre-recession and a historic high level of vacancies suggests any drop off in labour demand growth should be short lived.
  2. “Credit conditions for large and medium sized businesses are continuing to improve”, according to Ian Stewart, chief economist at Deloitte, responding to the latest Bank of England Credit Conditions Survey. He added that “this is consistent with our latest survey of chief financial officers, who start 2015 with risk appetite above the long-term average and predicting a strong year for business investment. After declining for more than five years, 2015 is likely to be the year in which corporate borrowing finally starts to recover.” It may seem like the small firm sector is a “weak spot” here, but it could just be because profitability is up – the 2014 Q3 SME Finance Monitor report says that three quarters of small and medium companies did not “want or need” to access bank credit.
  3. Staying with SMEs, research by npower published last month revealed that three in five small and medium companies in London “expect to see an increase in business turnover” in 2015. 60% of those surveyed expect wages to rise for full time employees with one in six saying “wages will outstrip inflation”. All of which paints a picture of a city feeling more assured about the future than it has in a long time, and as Jason Scagell, director of npower Business, said when releasing the figures: “London is widely seen as the powerhouse and bellwether of the wider UK economy, so the confidence shown by SMEs in the capital is encouraging for the country as a whole.”
  4. Figures released by the Finance & Leasing Association (FLA) at the start of the month showed 13% growth in asset finance new business during 2014 to £25.4 billion, the largest annual rate of growth since the financial crisis began. Geraldine Kilkelly, FLA’s Head of Research and Chief Economist, said: “The figures show a strong recovery in the asset finance market in 2014. Businesses were keen to use leasing and hire purchase to invest in a wide range of assets, with particularly strong growth in new finance for production plant, agricultural equipment and construction equipment. The core market of deals of up to £20 million wrote new business of £24.6 billion in 2014, and is on target to surpass its pre-crisis peak in 2015.” In December alone, business equipment finance grew by 6%, IT equipment finance by 10% and plant and machinery finance by a huge 48%.
  5. This morning, just as I was putting this list together, the Confederation of British Industries upgraded its growth prediction for the UK economy in 2015 to 2.7%, up from the 2.5% they predicted in November. Katja Hall, CBI Deputy Director-General, said ” falling unemployment coupled with improving wage growth and rock bottom inflation should mean that people see more money in their pockets” with Rain Newton-Smith, CBI Director for Economics, adding “The UK is in good shape compared with other economies, with both investment and household spending underpinning economic growth.” The revised prediction also takes into account the high probability that the MPC won’t raise interest rates until early 2016, helping to support growth of 2.6% next year.

[Sources: 1 2 34 5. Photo. Follow Kind Consultancy on LinkedIn to see all our blogs first and keep up with company news]

“We Don’t Need An Interim Manager!”

“An interim manager? We’re not doing THAT badly!”.

There’s a popular myth that an interim manager is an emergency option, that any company hiring one must be a sinking ship looking for someone to co-ordinate the bailing out. And sometimes bringing in an outside expert can be the ideal parachute for a company in freefall – but to see it as the only time for an interim hire is short-sighted and simplistic. In a recent survey of 1000 senior interim executives, less than 17% of them said their last appointment had been prompted by a company in crisis. Much more common were positions brought about by companies launching major new projects, looking to address internal change or seeking to grow their business.

Where finding and hiring a permanent employee with the right experience, skillset and culture fit can take months, interim managers can be in place and deploying their industry expertise within days. Unlike a regular hire, they’re not given a month to settle in and gently ramp up to a big project, they know they need to start immediately identifying problems and delivering solutions. Plus because of the wide variety of experience, they’ll have from working on different projects, you’ll be getting a vast amount of varied expertise, deployed for you in a short amount of time.

Ok, so they’re cheaper to get into the office – but won’t a permanent hire cost you less in the long run? Not necessarily – after taking into account the holiday days, the pension, the company car and everything else a new executive is going to expect, they’ll end up being a lot more expensive than an interim manager who you only need to pay for the days they work. This is before beginning to calculate the return on investment and the value added by bringing in an experienced senior manager who knows they need to act quickly to achieve measurable results and who will leave behind a wealth of knowledge for your permanent team.

Lynsey Moore

[This article originally appeared on Lynsey’s LinkedIn. If you have any interim management needs, contact us on 01216432100 or info@kindconsultancy.com]

Read more on the pro’s of interims here, and why you should think about choosing an interim solution here.

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