All business are having to adapt very quickly to a new working environment in the context of the current Covid-19 pandemic. However, regulated firms are facing additional challenges, in that they have to satisfy the FCA and PRA’s expectations of them and their management of their staff. In particular, the Senior Managers and Certification Regime remains in force and firms will have no choice but to alter their usual compliance practices to fit with a remote working environment.

Further, many financial services firms are also tasked with designating “key workers” after government guidance confirmed that this included staff “needed for the provision of essential financial services”. The FCA has published limited guidance on what this means, emphasising that it falls to firms and Senior Managers to decide who should be designated as such, but that it expects numbers of key workers to be kept as low as possible.

We have given some thought to practical tips for addressing these challenges.

SMCR compliance

With remote working making delegation and oversight more of a challenge, and the potential for some staff to adopt an “out of sight, out of mind attitude” and to begin to slacken their approach to Conduct Rules compliance, the new environment presents any number of difficulties with SMCR compliance. Ways of mitigating these might include:

• Scheduled daily check-ins/updates between Senior Managers and those they oversee. If they oversee large numbers of staff, the updates can take place with “spokespeople” for that team of staff. This will help to ensure rapid escalation of any issues and will allow areas of potential risk to be spotted quickly, ensuring that senior managers have the most effective oversight possible.
• Designing a “rota system” so that each Senior Manager has a “second in command” that they can hand over to in order to ensure that their responsibilities are carried out in the event that they fall ill;
• Providing staff with technology to allow them to serve customers effectively whilst maintaining confidentiality and avoiding the risk of harm (e.g. headphones so that customer calls cannot be overheard);
• Requiring staff to complete online training and personal development records to track their competence to perform their role;
• Effective communication from managers to emphasise that expectations of staff remain the same despite the remote working environment; this might include online training for employees to empower them to work remotely in a way that complies with the Conduct Rules;
• Adjusting systems and controls (including record-keeping practices) to potential changes in location e.g. purchasing software which can record calls between staff and customers. This is a specific recommendation of the FCA in recently-published guidance. Monitoring recorded calls might also help to track Conduct Rules compliance, but is subject to the usual data protection considerations.

Designation of key workers

Regulated firms are also required to designate those workers that they consider “fulfil a role which is necessary for the firm to continue to provide essential daily financial services to consumers, or to ensure the continued functioning of markets”. The FCA’s guidance on which workers might fit this description is limited, save that it has clarified that it “expects the total number of roles requiring an ongoing physical presence in the office or business continuity site to be far smaller than the number of workers needed to ensure all of a firm’s business activities continue to function on a business as usual basis”. It has also given some specific examples of categories of staff that it does expect to be able to carry out their roles from home, including:

• • financial advisers, as they can offer their services online or by phone
  • staff who can safely and securely trade shares and financial instruments from home
  • business support staff, such as those in IT who can triage issues from home/gain remote access to individual desktops, unless they are looking after specific equipment or technology
  • claims management companies and those selling non-essential goods and credit.

It is clear from the above that the FCA expects firms to invest in technology to facilitate employees working from home in all cases, save where the employee would be unable, even with the right technology, to carry out their role from home. Such employees might include IT/technology specialists who are needed to carry out repairs of equipment which must be stored in the office because it is too large to transport to a remote working location or because this would compromise security measures.

Firms therefore need to consider carefully the following:

• Which staff really cannot carry out their roles from home as things stand
• Whether there are any adjustments that would allow these staff to work from home e.g. purchasing new technology
• If not, how they can limit the time these staff spend in the office e.g. collating all non-urgent IT-related requests so that they can all be addressed in a weekly slot
• How they can provide staff with adequate proof that they are considered a key worker, such as providing them with an appropriate letter so that their child can attend school

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