Financial Crime World

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Financial Promotions: Firms Must Have Systems and Controls in Place to Approve

In a bid to ensure transparency and fairness in financial promotions, firms operating in the UK must have robust systems and controls in place to approve such activities. The Financial Conduct Authority (FCA) has outlined strict guidelines for firms to adhere to, ensuring that investors are protected from potential harm.

Understanding FCA Regulations

The FCA’s approach to regulation is designed to promote market integrity and protect consumers. To achieve this, firms must be aware of the main compliance requirements and ensure employees are trained on policies and procedures. The regulator has outlined its regulatory structure in its Handbook, outlining key rules that firms must follow.

Market Abuse Regime

The Market Abuse Regime (MAR) is another critical area where firms must demonstrate their understanding. MAR defines market abuse as any behavior that distorts the market or affects the price of financial instruments. Firms must be aware of the different types of market abuse behaviors and know what to do if they become aware of suspicious activity.

Operational Resilience

In an increasingly complex financial landscape, operational resilience has become a major concern for firms. The FCA’s guidance on systems and controls aims to reduce the impact of disruptions to important business services. Firms must identify “important business services” and implement effective resilience frameworks, including:

  • Mapping
  • Impact tolerances
  • Scenario testing
  • Self-assessments
  • Management information

Product Governance

Under MiFID II, firms have responsibilities in respect of product governance. This includes:

  • Design
  • Approval processes
  • Target markets
  • Ongoing oversight

Firms must put in place procedures to meet FCA requirements, ensuring that products are designed with the right features and are suitable for clients.

Sanctions Regulations

The UK’s Sanctions Regulations aim to restrict financial crime by imposing penalties on individuals and entities that breach sanctions. Firms must be aware of these regulations and take necessary steps to avoid breaching them. This includes:

  • Understanding the tactics used by entities to evade sanctions
  • Ensuring compliance with regulations

Senior Managers and Certification Regime

The Senior Managers and Certification Regime (SM&CR) is a key component of the FCA’s regulatory framework. The regime requires firms to certify certain employees and appoint senior managers, who must take responsibility for specific functions. Firms must also ensure that their certification processes meet the FCA’s requirements.

Conduct Rules

The Conduct Rules under SM&CR aim to promote responsible business practices among financial services firms. Firms must ensure that their staff understand these rules and adhere to them. The regulator has outlined two tiers of requirements, with breach reporting requirements in place for non-compliance.

Treating Customers Fairly

Treating Customers Fairly (TCF) is a key initiative aimed at improving outcomes for customers. Firms must be aware of the five principles of business and six consumer outcomes, ensuring that they provide fair treatment to clients. This includes:

  • Identifying vulnerable customers
  • Taking responsible action when dealing with them

Conclusion

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In conclusion, firms operating in the UK financial services sector must have robust systems and controls in place to approve financial promotions and adhere to FCA regulations. The GATEway’s compliance solution has helped a hedge fund based in the West End achieve its goals, demonstrating the importance of modern compliance solutions for financial institutions.