Enforcement Trends for 2020: Interview with Sara Cody

Enforcement Trends for 2020: Interview with Sara Cody

Financial Services analysis: Sara Cody, Counsel PSL in the Financial Regulation Group at Linklaters, and a consulting editor of LexisPSL Financial Services, outlines the priorities for FCA Enforcement in the year ahead, considers the impact of the Senior Managers & Certification Regime (SM&CR) and discusses trends in FCA investigations.

 
What do you see as the key focus for FCA Enforcement in 2020?

Key areas of focus in the coming year are likely to include operational resilience and cyber-security, along with anti-money laundering (AML) and a continued focus on culture.

 
How will the FCA’s scrutiny of firm culture be translated into enforcement?

It’s quite interesting to consider how culture feeds into enforcement, as opposed to being a broader supervisory concern. The Financial Conduct Authority (FCA) can’t simply fine a firm for bad culture; it’s too nebulous. However, the FCA can fine firms for decisions and practices that arise out of a poor culture, such as sales procedures that fail to put the customer first. Last year, for example, we saw the FCA cite an aggressive sales culture as a factor in its decisions to fine Standard Life and Prudential for mis-selling annuities, and Carphone Warehouse for mis-selling insurance. In these cases, the FCA found evidence of a high pressure sales environment — such as offering low base pay supplemented by high bonuses to reflect sales success, sales league tables on the office wall or rewards of spa breaks and weekend getaways for those who generated the most revenue — all things that are likely to remove any incentive for sales teams to ensure that customers actually want or need the product you are selling.

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About the author:
Prior to joining LexisNexis in 2016 as a paralegal, Lauren was an adjudicator at the Financial Ombudsman Service. There she resolved consumers’ complaints, and gained knowledge about a wide variety of financial products. Before this she studied Law at Nottingham Trent University.