New Year, New Decade, New Challenges?

FSTP, 2020, New Year, Financial Services

It may be the start of a new year – nay, a new decade – but for Financial Services is it just a case of the ‘same old, same old’? – Discuss.

Would we really be justified in taking such a jaded view, particularly at the start of a week-old decade that’s already answering to the name of ‘Turbulent Twenties’?

It’s fair to say there are some pretty significant challenges to address this year. On the face of it, most of these are hoary old chestnuts, but the risks they pose are no less real and present for all that.

Here are my musings…

  • Brexit. Now we have a degree of certainty around the whole issue of ‘getting it done’, there’s still a mountain of stuff to sort out (understatement of the year!) including how the City can maintain its position as a centre of global capital markets and how our regulators will work with their European counterparts to provide workable, cross border arrangements, whilst ensuring business continuity in the process.

  • SMCR – no it’s not gone away! Contrary to the belief held by some, 9/12/19 was not the finishing line. It was the start line. The SMCR journey continues and woe betide anyone who believes the pressure’s off now. SMCR should have as high a profile in Board and management discussions this year as it did last. There’s still a lot to do, even for firms who were confident that they had done all they needed to do by 9/12/19. I’d now be a very wealthy woman if, in the run up to 9/12/19, I’d been given £1 every time I’d heard someone utter, “Just look at how many people we have in Compliance now”. But therein lies another challenge for firms to confront – SMCR / healthy culture are not the sole province of Compliance and / or HR folk they are a concern for everyone who’s accountable for running a business. Furthermore, now SMCR is alive and kicking in the solo-regulated sector, the FCA will be wanting to keep tabs on how well its baby is progressing in the outside world. Don’t be surprised if you get asked by the regulator to explain how you’ve implemented and are continuing to embed the new regime. Be sure that you have your (convincing) answer already prepared.

  • Climate change – was I the only one who looked at their Christmas rubbish bin and thought, “Crikey! I have to do my bit for the planet”? Just as ‘Veganuary’ and other initiatives are being embraced more and more in domestic life, as professionals we will need to do more to demonstrate that we are doing our bit to reduce the environmental impact of our business activities. It’s a divisive issue, but there’s no getting round the fact that we have to move to being a low carbon economy. Now don’t get me wrong, it’s not all about altruism – marketing-savvy businesses have already started to “advertise” what they are doing to try and reduce their impact on climate change. A case of ‘Where there’s lack of muck, there’s brass’.

  • The ‘white heat’ of technology – Like most industries, Financial Services has become highly reliant on technology in the everyday running of business and providing unparalleled levels of service and accessibility to our clients. However, the ‘noise’ surrounding the supposed benefits of innovation and the clamour to keep up with the herd can sometimes blind us to the potential risks and pitfalls. The challenge is to move the technological agenda forward whilst also paying particular attention to the threats posed by the likes of cyber criminals who are looking to exploit those who choose to run before they can walk.

  • Rebuilding (again) public trust in the City in the wake of Woodford’s collapse. Not a lot more to say about this, other than, ‘oh, boy…’.

  • Resourcing – Skills gaps and backfilling of holes left by those leaving the industry mean that we should be looking even more closely at our succession planning arrangements and continued development of our workforces. This requires investment in time, energy and – here’s the crunch – money; but how much budget are firms willing to put aside to ensure they are not caught out by this?

Not unwholly connected to any of the challenges mentioned above, ask yourself:

  • Are we ready for Brexit and the challenges and opportunities it affords us? Do we get regular summaries from Compliance and what it means to us?

  • Does my Compliance team demonstrate that they are partnering with the business to consider the use of increased technology and how concern for climate change may be linked to effective and ethical Corporate Governance?

  • Does my Compliance function have the skills to keep up to speed with pace of change?

  • Has our risk register incorporated the challenges we are now facing at the start of 2020?

  • Does my firm’s culture enable us to focus on the commercial priorities of the business whilst balancing these with the need to ensure good outcomes for clients?

  • Are we able to Certificate individuals in our business that are doing critical roles – what happens if we can’t?

  • Where are the firms’ future leaders coming from?

  • How do we keep our Senior Managers appraised of all of this?

At FSTP one of our key aims in 2020 is to help you sleep at night by helping you to simplify and put into proper perspective the challenges that you are facing and to help you cope with the rapid pace of change. We can help take the pressure off your internal resources. From Apprenticeship Programmes to upskilling your workforce, providing CPD for existing employees through to supporting your Senior Managers by reviewing the weighty tomes of MI and helping to sort the wheat from the chaff. Look out for our updates and consider the opportunity-cost saving of external validation to the challenges and opportunities you are dealing with in 2020.

Julia Kirkland

Senior Partner