UK FCA findings on corporate finance firms' compliance functions

The UK Financial Conduct Authority (FCA) has published a blog with findings from its survey of corporate finance firms’ compliance resources and activities. While the FCA identified examples of good practice, it also highlighted areas requiring improvement, emphasising that compliance should not be viewed merely as a series of tasks, but as a culture that senior managers must embed throughout the business.

The key findings were:

• 63% of firms reported having a compliance function that is not dedicated solely to compliance and has other business responsibilities. This can create conflicts of interest, for example where compliance also plays a role in revenue generation.
• Arrangements should be proportionate to the risks involved, but they are only proportionate if they deliver good outcomes. This is particularly important in small firms, where decision-making may be concentrated in a small number of people.
• 90% of respondents used some form of third-party compliance support. However, responsibility for regulatory compliance remains with the relevant senior management function holder, and firms must maintain effective oversight of any third-party support.
• 47% of firms carried out all the activities covered by the survey. The wider gaps related to whistleblowing arrangements, breach registers, monitoring complaints, reporting to management and involving compliance in management meetings. The most common gap was failing to include regulatory compliance in staff performance assessments, reported by 140 firms.

The FCA expects firms to use these findings to reflect on their own arrangements and identify where improvement is needed.

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