Financial Crime World

Financial Promotions: Avoiding Compliance Mishaps

In today’s complex regulatory landscape, it is crucial for financial institutions to ensure they have robust systems and controls in place to approve financial promotions. The Financial Conduct Authority (FCA) has established strict guidelines for firms that engage in regulated activities, requiring them to adhere to the Handbook’s rules on financial promotions.

Key Requirements

To avoid compliance mishaps, firms must:

  • Understand FCA Regulation: Familiarize yourself with the FCA’s approach to regulation and the regulatory structure in place.
  • Know Key Rules: Be aware of the key rules governing financial promotions, including those related to market abuse, product governance, and sanctions regulations.
  • Implement Effective Systems: Implement effective systems and controls to ensure compliance with these requirements.

Systems and Controls

Firms must have robust systems and controls in place to approve financial promotions. This includes:

  • Operational Resilience Framework: Identify important business services and implement a framework to reduce the impact of disruptions on clients and the wider market.
  • Product Governance Procedures: Ensure products are designed, approved, and distributed in a fair and transparent manner.
  • Sanctions Regulations Compliance: Ensure compliance with sanctions regulations to prevent financial crime.

Individual Responsibilities

Individuals working within firms must also be aware of their responsibilities:

  • FCA Regulation Understanding: Understand the FCA’s approach to regulation and the regulatory structure.
  • Market Abuse Identification: Know how to identify and report market abuse behaviors.
  • Treating Customers Fairly (TCF): Be able to describe the key principles of TCF and implement TCF throughout the firm.

Case Study

One hedge fund based in London reported success with a modern compliance solution, The GATEway. “We wanted to introduce a modern compliance solution without the need to hire more compliance staff,” said the COO. “The GATEway has met all of our requirements.”

Conclusion

In conclusion, firms must ensure they have robust systems and controls in place to approve financial promotions, while individuals working within these firms must be aware of their responsibilities under FCA regulations. By understanding key requirements and implementing effective compliance procedures, firms can avoid compliance mishaps and maintain a strong reputation in the industry.