Making remote working possible in financial services – Pinsent Masons

The introduction of the Senior Managers and Certification Regime (SMCR) has formed part of the regulator’s efforts to encourage strong cultures within financial services firms, but where employees are working from home, it may be more difficult for managers to notice poor behaviour.

For example, in terms of non-financial conduct, if someone says something inappropriate in the office, this may be overheard, whereas if it is said during a video call, only the participants on that call will hear it.

It therefore becomes more important that everyone within the firm is willing to speak up and flag concerns, and not just senior management. This will generate a stronger culture led by all within the firm that should endure even among those working away from the office.

Regulatory monitoring

Complying with regulatory requirements is critical for financial services firms, but many of the practices that firms will have put in place will have been based on employees being office-based.

For example, personal mobile phones may be banned as a measure against insider dealing. It becomes impossible to monitor this prohibition if employees are working from home.

Financial services firms therefore need to evaluate all such measures to ensure they work in both an office and home environment.

Last year the FCA issued expectations for firms on remote and hybrid working, in order to help them plan and meet regulatory responsibilities. A firm needs to show that having a hybrid model will not affect its ability to meet the requirements of the activity it is regulated for, harm consumers, damage market integrity or increase the risk of financial crime, among other obligations.

Firms have to show that hybrid working is not having a negative impact on staff well-being or diversity and inclusion.

The SMCR rules also put obligations on a firm’s leadership to satisfy themselves that business areas are functioning correctly. This means firms will need to look at whether they have put in place additional processes to verify that tasks are being performed properly by staff working from home. 

Confidentiality is another key issue which financial services firms should look at. It is harder to protect confidential documents if someone is working outside the office.

Firms will have to identify whether staff have secure places to work and that these are separate from the people they live with, and whether printing documents at home or transferring them to other devices meets security requirements.

Complying with regulatory rules and creating a safe working environment are not new burdens on the financial services industry. However, the scale of flexible working in 2022 means the challenges of making it work are greater than before.

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