Financial Regulation And Compliance Assignment Sample

Dynamics of Financial Compliance, FCA's Oversight & Strategies for Mitigating Misconduct in the Financial Industry

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Introduction Of Financial Regulation And Compliance Assignment

An organization is required to assess as well as identify the financial crime risk to maintain financial regulation. In simple terms, misconduct results from a lack of integrity within the organization. Serious misconduct in financial regulations can further lead to the selling of consumer-based products. Financial misconduct usually manifests itself in businesses in different forms. For example, fraud or dishonesty can be considered to be misconduct of financial services within an organization. FCA's roles and responsibilities mainly involve regulating and protecting financial services that are being provided by the organization. Protecting the consumers from fraudulent activities and keeping the overall industry stable are some key roles as well as responsibilities performed by the FCA. By this, organisations as well as individual consumers can take appropriate actions against the suspension or restriction orders. The study is going to evaluate the role of leading law firms in London in using the record of FCA for discouraging misconceptions about financial services.

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Financial compliance can be referred to as the enforcement and regulation of rules and laws in capital markets and the financial markets. It can range across the financial spectrum and investment from banning practices for retail practices of banks. Regulatory compliance within financial actors is associated with tanks and their ways of adhering to local regulations and laws. Data protection regulation cannot be entirely accorded with full compliance of scope in the industry of final services.

Discussion

The misconduct in terms of FCA is the misconduct result that is caused due to lack of integrity. The failure of the firm system and control includes the failing of governance and senior managers, the misspelling of the unsuitable products and other offences[1]. To find out the misconduct FCA can search the severity and nature of the hazard that has risen and the unsuspected misconduct. This helps them to find out the suspected misconduct's ability to harm the customers, and firm in case the action is not taken. Moreover this helps the misconduct has implications and how the customers are being exploited.

As per "EG 12: Prosecution of Criminal Section 12.1: The FCA’s general approach Offences" under "section 12.1.1" it can be stated that FCA has the powers under the 401 and 402 as per the act that defines criminal offence range that covers the Wales, England and Northern Ireland. As per "section 12.1.2" it can be said that the general policy of FCA includes the criminal justice system that includes the cases where criminal offences are being taken into account. This help to decide where the criminal has to bring being it in Waked, Ireland or the England and it applies the basic principle of the "Code for Crown Prosecutors"[2]. The FCA plays a vital role in the firm as to bring in the "line of defense" by reducing and preventing organizational financial crime. This helps the firm to manage work culture prevention, control the system and increase the firm effectiveness. The firm has the responsibility to meet the risk related to the crimes of finance and the disruption that occurred in the firm.

"The Financial Services Act 2021 Ch 1 Sec 4 (2AB)" describes that "FCA investment firm" is the statement that defines that an authorized person comes under the meaning of "section 31(1)(a) of FSMA" as well as it is not for the designated firm that do investment[3]. The FCA has the right to persecute the firm and individuals that do financial crimes. The FCA can also take action against the firms and any individual that does regulated activities without taking any sort of authorization. The actions that FCA can take are to withdraw firm authorization, and restrict individuals from carrying the wrong activities. Moreover, they can suspend the firm or any individual operation and can take fines grow the firms or the individuals who breaches the rules set by FCA or take any sort of market abuse activities.

As per "Section 1H of the Financial Services and Markets Act 2000" it can be found that financial misconduct includes any sort of fraud or taking any sort of dishonest action in any work process, misuse of financial information or doing any dot of misconduct activities, competing for any sort of financial crime like bankruptcy or other. This type of activity in case of occur in the firm can create a sense of dissatisfaction among the employees. This can create a negative impact on the growth opportunity of the firm; it can create an impact on the employee's career growth opportunity, benefit and compensation. It can hamper the work-life balance, decrease work culture and can reduce the brand value of the firm. This can create negative relation in between the employee and the organization; it creates a negative association in between the public promotion and announcement of the misconduct and specific dimensions.

Misconduct in recent times is very prominent in the financial industries and it creates a negative impact on the business operations. Therefore it has to be improved in order to meet the organizational goals and the image protection of the firm.

Controls of "Financial Conduct Authority (FCA)"

The "Financial Conduct Authority (FCA)" controls the monetary benefits enterprise in the country United Kingdom. Its function contains saving customers, supporting industry stability, and facilitating healthy matches between economic benefit providers. The FCA highlights the important part recreated by companies as a foremost string of security in controlling and facilitating economic corruption through “strong deterrence civilisations and adequate procedures and management”. Companies include a responsibility to address the threat of economic corruption and functional disorder. The information collection contains elements on the whole numeral of extended protests, completed protests, objections maintained, and the whole redress produced by companies in favour of a 6-month course [4].

The latest controllers include already produced robust enforcement activity and choice resume to do so. In the financial year 2013, the FCA assessed penalties computing million of £425 [5]. In the month of October, the year of 2014, a million of £450 held stood produced underneath an FCA redress system to customers who lived "missold card" and originality security procedures. In the month of November, the FCA brought activity in answer to attempted FX's manipulation condition. Thus distant fine 5 pools billion of £1.1, with possible criminal malfeasance by individuals living examined by the "Serious Fraud Office" [6]. "Payday lender Wonga" includes newly decided to spend millions of £2.6 in redress and report off over million of £200 of total loans, "following intervention by the FCA" [7]. Numerous newly, the "FCA and PRA" control charged connected damages of millions of £56 following an examination into IT strategy declines at RBS, "Natwest and Ulster Bank" which departed customers without entrance in order to their accounts

The primary intent of the FCA obedience function

The "Financial Conduct Authority (FCA)" controls the monetary benefits enterprise in the country United Kingdom. Its function contains saving customers, supporting the drive stable, and nurturing healthful matches between economic benefit providers[8]. A company that lives as an administration organisation or an "operator of an electronic system" in reference to lending should take into understanding the character, hierarchy and sophistication of its industry. The character and scope of economic assistance and actions launched in the study of that company, select, execute and support acceptable guidelines and guidelines developed to see any chance of defeat by the corporation to concede. With its responsibilities underneath the regulatory scheme, as well as associated risks, and placed in position acceptable standards and systems [9]. It was created to underestimate and include hazards and to allow the FCA to exert its strengths actually beneath the regulatory scheme.

The "Financial Services Act 2012 (FSA 2012)" greatly changed the regulatory geography in favour of economic benefits in the country United Kingdom by, inter alia, presenting the "Prudential Regulation Authority (PRA)" and the "Financial Conduct Authority (FCA)", which carried over from the "Financial Services Authority (FSA)". These controllers include complimentary through other parts[10]. This Course Message supplies an intro in order to the appointment of FCA in relation to economic corruption. In this particular scenario, where a company stands gathering details from a current client, Rule 31 of the "Money Laundering Regulations (MLRs)" needs the narrative to be completed where the knowledge exists not delivered [11]. Nevertheless, in the present circumstances, they desire companies to complete practical measures to manage this knowledge or evaluate whether there exist additional methods of living reasonably pleased with the consumer's essence, before accepting a determination to complete the narrative.

Objectives of FCA and operational challenges

In distinction to its precursor, the FSA, which included a digit of regulatory purposes (regulating economic corruption existed one); FCA holds a "single strategic intent" of providing that needs work nicely. Within that prevailing purpose it includes a numeral of functional purposes, ensuring a suitable breadth of security in favour of customers, saving and improving the virtue of the UK economic strategy and encouraging sufficient contest in the welfare of customers, which sustains the strategic intent. Preserving the goodness of the economic demand exists as a fundamental purpose in favour of the FCA[12]. In the present circumstances, it stands necessary in favour of companies to sustain adequate procedures and authorities to control banknotes "laundering and terrorist financing". They realise that the present conditions may provide banks with working issues with respect to economic corruption methods and management. Companies must not desire to manage working problems by altering their chance need. In favour of example, companies must not modify or control-off, off existing marketing monitoring stimuli/cusps, or boycott screening techniques[13]. In favour of the exclusive objective of lowering the numeral of signals developed to manage operating problems.

The "Financial Conduct Authority (FCA)" functions alongside the "Prudential Regulatory Authority (PRA)" in controlling the economic benefits enterprise in the country United Kingdom. Whereas, the "PRA" stands accountable in favour of the prudential principles and management of pools, structure organisation and it also promotes recognition partnerships, insurers and significant acquisition companies. The FCA stands accountable in favour of the prudential limitation of those economic benefits companies not governed by the PRA includes administrator’s supervisors and separated economic advisors[14]. The FCA contains “rule-making, investigative and enforcement authorities” that it operates to control the monetary benefits drive.

The FCA exists even accountable in favour of encouraging adequate contest. It makes sure that appropriate needs work agreeably and in favour of the behaviour principles of all monetary benefits companies [15]. This contains working to stop need misuse and make sure that customers obtain a reasonable discount from economic companies.

The FCA comments that their general purposes exist to provide that needs and economic strategies exist sound, long-lasting and resilient, with transparent pricing knowledge that customers be able to effortlessly comprehend. This commitment contains been set departure by the Nation according to the "Financial Services Act 2012" [16]. In this particular scenario, the FCA contains three individual objectives of operational. It's included in order to secure a proper protection degree in favour of customers. Another is to enhance and protect the integrity of the financial system of the country United Kingdom. The last one is to be to promote efficient competition in the proper interest of customers.

Recommendations

Recommendation 1, making more transparent approach enforcement

Approach of FCA can be associated with the discouragement of misconduct within the financial industry. The approach can be an explanation of the approach that was followed by FCA to address harm by adding public value with help of statutory powers for investigating appropriate, civil, criminal and disciplinary actions. There can be contraventions that can involve the commission of a criminal offence, FSMA ("Financial Services and Markets Act 2000"), principles rules and failure that can comply with other obligations of regulatory[17]. The approach of FCA enforcement can be associated with investigation powers and gathering investigations. It can be associated with offences and prosecution of criminals through obtaining injections of sanctions. EG (Enforcement Guide) and FCA's investigation team can develop the operating criteria. Information regarding making decisions and policies of operation can be set out with help of DEPP (" Decision Procedure and Penalties Manual")[18]. Publishing of annual enforcement for each test can be beneficial to develop greater public values and enhance the transparency of the organisation. It can conclude information regarding investigations and actions that can take place through a statistical overview of FCA's performance.

Recommendation 2, use of data and intelligence to identify a broader misconduct spectrum

FCA can make use of data and intelligence that as collected sealer by them to enhance chances of identifying cases of misconduct. It can include information from companies, market data, information from consumers and information from the public database[19]. There is values information that can be collected from whistle-blowers that can suffer the earliest information of doing something wrong[20]. It can be important that identification of full section can be a serious sapping of misconduct in wholesale and retail market. Misconduct can result in a lack of integrity. A serious firm failing system, failure of governance and failure of senior’s manager can be associated with misconduct[21]. Selling products that can be unsuitable for consumers can be identified with help of earlier data. Anti-competitive behaviours can be identified that can be seen as a one of the major reasons behind occurrence of misconduct in the financial industry, financial crime that can include manipulation of the market, false information money laundering and insider dealing can be traced with help of technology and existing data as collected by FCA before.

Conclusion

The study concluded that FC needs to focus on mitigating the harm that can be caused due to statute power for investigating appreciative, criminal, disciplinary and criminal activity that includes contravention. During the investigation, FCA can find out the occurrence of serious misconduct that can lead to the development of full understanding based on factors that can lead to making decisions of the act based on requirement and necessary of this situation. FCA cannot start breaches requirement and files in serious misconduct. There is a need for an investigation that can be led with help of tools viable without enforcement of actions. FCA can start investigation that can lead to developing a greater belief in misconduct that can take place. Investigation in earlier stages can be led with following requirements and rules before the occurrence of harm. The flowchart can be developed for showing a process for typical enforcement for FCA.

Detection of serious misconduct can be done with help of carrying out work by the oversight of the market, authorisation, supervision, intelligence, whistle blowing and financial crime team. FCA collaborates with other agencies of law enforcement and regulators in the United Kingdom and overseas. There can be two different teams for vetting that can be beneficial for managing positioning within market oversight and law enforcement. Above mentioned team can be beneficial to prioritise matters of law enforcement from FCA to stakeholders. These teams can escalate and consider the potential that can matter for the decision of investigation to relevant decision makers. FCA can use judgments and experience to make identification for serious misconduct that can reduce the impact on firms, Marty and consumers. FCA can open gate investigations that can decrease and mitigate the chances of occurring misconduct.

References

Anarfo EB, Abor JY and osei KA, “Financial Regulation and Financial Inclusion in Sub-Saharan Africa: Does Financial Stability Play a Moderating Role?” (2020) 51 Research in International Business and Finance 101070

Brophy R, “Blockchain and Insurance: A Review for Operations and Regulation” (2019) 28 Journal of Financial Regulation and Compliance 215

Cassim R, ‘A Critical Analysis of the Corporate Whistleblowing Provisions of the South African Companies Act’ [2023] Journal of African Law 1

Chapter 12 prosecution of Criminal Offences - FCA Handbook (no date). Available at: https://www.handbook.fca.org.uk/handbook/EG/12.pdf (Accessed: March 20, 2023).

Financial crime authority, ‘Financial Crime Systems and Controls during Coronavirus Situation’ (FCA6 May 2020) <https://www.fca.org.uk/firms/financial-crime/financial-crime-systems-controls-during-coronavirus-situation#:~:text=Maintaining%20the%20integrity%20of%20the> accessed 20 March 2023

Financial services act 2021 (no date) Legislation.gov.uk. Queen's Printer of Acts of Parliament. Available at: https://www.legislation.gov.uk/ukpga/2021/22/crossheading/prudential-regulation-of-credit-institutions-and-investment-firms/enacted (Accessed: March 20, 2023).

GOV.UK, ‘Financial Conduct Authority’ (GOV.UK2023) <https://www.gov.uk/government/organisations/financial-conduct-authority#:~:text=The%20Financial%20Conduct%20Authority%20(FCA>

Graham CF, “Have EU Derivative Policy Reforms since the 2008 Financial Crisis Been Designed Effectively?” (2021) 29 Journal of Financial Regulation and Compliance 256

Hodges OBE C, ‘Science-Based Regulation in Financial Services: From Deterrence to Culture’ (papers.ssrn.com1 May 2020) <https://ssrn.com/abstract=3590176> accessed 20 March 2023

Investigation opening criteria (2022) FCA. Available at: https://www.fca.org.uk/about/how-we-regulate/enforcement/investigation-opening-criteria#:~:text=misconduct%20resulting%20from%20a%20lack,of%20unsuitable%20products%20to%20consumers (Accessed: March 20, 2023).

Jones E and Knaack P, “Global Financial Regulation: Shortcomings and Reform Options” (2019) 10 Global Policy 193

Keller A and Kokkinis A, ‘The Senior Managers and Certification Regime in Financial Firms: An Organisational Culture Analysis’ [2022] Journal of Corporate Law Studies 1

Schmulow A and others, ‘AFCA: The First Foothill between Australia’s Twin Peaks’ (2020) 14 Law and Financial Markets Review 201

UK Accounting Plus, ‘Financial Conduct Authority (FCA)’ (Iasplus.com2012) <https://www.iasplus.com/en-gb/resources/other-regulatory/market-rules/fca>

Zetzsche DA, Arner DW and Buckley RP, “Decentralized Finance” (2020) 6 Journal of Financial Regulation 172

[1] Investigation opening criteria (2022) FCA. Available at: https://www.fca.org.uk/about/how-we-regulate/enforcement/investigation-opening-criteria#:~:text=misconduct%20resulting%20from%20a%20lack,of%20unsuitable%20products%20to%20consumers (Accessed: March 20, 2023).

[2] Chapter 12 prosecution of Criminal Offences - FCA Handbook (no date). Available at: https://www.handbook.fca.org.uk/handbook/EG/12.pdf (Accessed: March 20, 2023).

[3] Financial services act 2021 (no date) Legislation.gov.uk. Queen's Printer of Acts of Parliament. Available at: https://www.legislation.gov.uk/ukpga/2021/22/crossheading/prudential-regulation-of-credit-institutions-and-investment-firms/enacted (Accessed: March 20, 2023).

[4] GOV.UK, ‘Financial Conduct Authority’ (GOV.UK2023) <https://www.gov.uk/government/organisations/financial-conduct-authority#:~:text=The%20Financial%20Conduct%20Authority%20(FCA>

[5] Cassim R, ‘A Critical Analysis of the Corporate Whistleblowing Provisions of the South African Companies Act’ [2023] Journal of African Law 1

[6] GOV.UK, ‘Financial Conduct Authority’ (GOV.UK2023) <https://www.gov.uk/government/organisations/financial-conduct-authority#:~:text=The%20Financial%20Conduct%20Authority%20(FCA>

[7] Financial crime authority, ‘Financial Crime Systems and Controls during Coronavirus Situation’ (FCA6 May 2020) <https://www.fca.org.uk/firms/financial-crime/financial-crime-systems-controls-during-coronavirus-situation#:~:text=Maintaining%20the%20integrity%20of%20the> accessed 20 March 2023

[8] Financial crime authority, ‘Financial Crime Systems and Controls during Coronavirus Situation’ (FCA6 May 2020) <https://www.fca.org.uk/firms/financial-crime/financial-crime-systems-controls-during-coronavirus-situation#:~:text=Maintaining%20the%20integrity%20of%20the> accessed 20 March 2023

[9] GOV.UK, ‘Financial Conduct Authority’ (GOV.UK2023) <https://www.gov.uk/government/organisations/financial-conduct-authority#:~:text=The%20Financial%20Conduct%20Authority%20(FCA>

[10] GOV.UK, ‘Financial Conduct Authority’ (GOV.UK2023) <https://www.gov.uk/government/organisations/financial-conduct-authority#:~:text=The%20Financial%20Conduct%20Authority%20(FCA>

[11] UK Accounting Plus, ‘Financial Conduct Authority (FCA)’ (Iasplus.com2012) <https://www.iasplus.com/en-gb/resources/other-regulatory/market-rules/fca>

[12] Hodges OBE C, ‘Science-Based Regulation in Financial Services: From Deterrence to Culture’ (papers.ssrn.com1 May 2020) <https://ssrn.com/abstract=3590176> accessed 20 March 2023

[13] Keller A and Kokkinis A, ‘The Senior Managers and Certification Regime in Financial Firms: An Organisational Culture Analysis’ [2022] Journal of Corporate Law Studies 1

[14] UK Accounting Plus, ‘Financial Conduct Authority (FCA)’ (Iasplus.com2012) <https://www.iasplus.com/en-gb/resources/other-regulatory/market-rules/fca>

[15] UK Accounting Plus, ‘Financial Conduct Authority (FCA)’ (Iasplus.com2012) <https://www.iasplus.com/en-gb/resources/other-regulatory/market-rules/fca>

[16] Schmulow A and others, ‘AFCA: The First Foothill between Australia’s Twin Peaks’ (2020) 14 Law and Financial Markets Review 201

[17] Anarfo EB, Abor JY and osei KA, “Financial Regulation and Financial Inclusion in Sub-Saharan Africa: Does Financial Stability Play a Moderating Role?” (2020) 51 Research in International Business and Finance 101070

[18] Brophy R, “Blockchain and Insurance: A Review for Operations and Regulation” (2019) 28 Journal of Financial Regulation and Compliance 215

[19] Graham CF, “Have EU Derivative Policy Reforms since the 2008 Financial Crisis Been Designed Effectively?” (2021) 29 Journal of Financial Regulation and Compliance 256

[20] Zetzsche DA, Arner DW and Buckley RP, “Decentralized Finance” (2020) 6 Journal of Financial Regulation 172

[21] Jones E and Knaack P, “Global Financial Regulation: Shortcomings and Reform Options” (2019) 10 Global Policy 193

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