Last July, Xactium published an insight into the FSA’s ‘Twin Peaks’ Model. On the 1st April these regulations will be fully implemented. These significant changes will no doubt affect all manner of global organisations alongside the financial sector. Here we visit 4 tips for dealing with these new changes within your organisation and consider some of the ways in which your business might be affected by the new FSA structure.
1. Consider your goals
In light of the regulation changes your company ‘relationship manager’ has now been replaced with a ‘lead supervisor’. It will be their responsibility to recognize big risks and link those to the statutory objectives, consider possible ways to reduce the likelihood of those risks, protect the statutory objectives and to instruct firms to deal with these risks accordingly. It is possible here for you to develop your relationship with your Lead Supervisor through considering both your company goals and risk-specific goals, are these goals in line with your supervisor’s goals and the goals of society? By ensuring that your targets are parallel with those of your supervisor you can demonstrate responsible risk management, important to both your customers and employees.
2. Be proactive
A proactive organisation is a successful organisation, and managing and dealing with your risk proactively is key during these changes. In addition to managing your risks, a willingness to comply with regulatory suggestions when necessary can ensure any changes are carried out smoothly and quickly. Of course, your right to challenge your supervisor’s decisions remains and should you feel that suggestions have been incorrectly made, you are entitled to come forward as before.
3. Be realistic
Although the new system aims to improve the regulation of organisations it remains possible that errors in judgement may be made from time to time, by both the regulator and the firms. As your company moves forward with the new system in place it is important to be realistic and be aware that decisions that appear right at the time may be viewed as incorrect in hindsight.
4. Invest in your risk management
The time has come for wide regulatory change and this will require further investment. Former FSA Chief Executive Hector Sants warned firms last year that these changes would require greater resources and expertise, which will of course increase costs. These costs should be viewed as an investment in your company’s risk management, to increase transparency and regulatory oversight as well as reducing your risk of incurring penalties.
Take a look at the cloud-based risk management solution from Xactium helping global organisations to manage their regulatory relationships during this period of change.