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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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