By Kali Bagary | 15 September 2018 |

FCA Fines Increasing in 2018

The top investment firms in the city seem to have their compliance under control, as they have not faced FCA related ‘fitness and propriety’ fines this year to date.

It is the next layer of general insurance and investment advisors that are still being caught out.

This year alone several firms have had fines ranging from £29,000 to over £460,000 levied.

Whilst this is surprising, as the financial and regulatory technology market is flooded with solution providers, it is not completely unexpected. Why? Simple.

'It is simply too difficult, will cost too much and demand too much time to integrate new innovative FinTech and/or RegTech technologies.'

Integration challenges exist for all; both for large enterprises as well as mid-sized & small financial advisory agencies.

Whilst they each face the same challenges, their considerations will vary, as follows:

  1. Costs

    1. Larger enterprises typically will find finances to support implementing automated FinTech / Reg Tech solutions.
      Time costs will be more of an issue here as changing technology and policies are more complex, purely due to the size of the business.

    2. Mid-size businesses may have a challenge in finding finances to support implementing automated FinTech / Reg Tech solutions .
      Time costs may be slightly easier as the business is smaller, may have updated platforms and involve fewer staff in this project.

  2. Innovative Solutions:

    1. May not necessarily fit into the (often outdated) existing technology infrastructure.
      Enterprise businesses may be slower in updating overall technology platforms, will need to conduct careful due diligence for any new product into their portfolio and will often want to recruit in house expertise before considering any integration of a new solution.
      This places a huge time challenge to ensure the final solution is in line with corporate strategy and is ‘future proof’.

    2. Often do fit into the existing infrastructure, however cost implications of the FinTech or RegTech solution will need to be considered.
      Addtionally a mid-size business may not necessarily have the inhouse staff capability so will need to look at outsourcing external project delivery teams.

  3. Functional Policies

    1. Will need to be reviewed, analysed and updated; new procedures will need to be defined, documented and promoted throughout the Compliance and HR staff community.
      Training plans will need to be written and extensive training conducted.
      The larger the size of the firm, the more staff will need to be involved.

    2. Matching functional policy and procedure to new solution may be easier for a mid-size business as there are fewer staff involved
      Another possible consideration would be to outsource HR and compliance completely, however the associated costs here would carefully need to be considered.

Ironically, implementing FinTech and/or RegTech solutions today couldn’t be easier. Whether the above considerations arrive at a conclusion of a platform upgrade to adopt innovative solutions off the shelf, in house development or via a customised solution matching existing infrastructure.

Whether project delivery is carried out through internal or outsourced project management teams. The scalable and flexible options all can cater to the needs of the business requiring a compliance monitoring solution, not the other way around.

Even though costs associated with purchasing and fitting compliance solutions will be notable, they will be nothing compared to the fines the FCA will levy.

Like this article? I hope it has given you something to think about. If you would like to discuss the complexities of SIMR, SM&CR compliance monitoring, reporting please feel free to call – we’d welcome the opportunity to have a real conversation about how we can save you time and money with infoFINIUM.

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