Football is a game of two halves but last night for English fans that added 4 minutes felt like another half! For the “football’s coming home” brigade it was a decent start. The debate around VAR was well and truly stoked following the game and the pundits debate on the efficiency of VAR continues! We “was robbed” a phrase that comes to mind! It is uncanny how this translates into parallels with current debate in the financial markets.
Last week, as the World cup got going, I chaired day two of the 4th Compliance & Conduct Risk in Financial Services Forum organised by the Ethical Corporation. Among the topics we dealt with were the SMCR and Individual Conduct and Accountability. With the SMCR rolling out to all FCA regulated firms in 2019 the individual’s accountability for their conduct was high on the agenda. The similarities between the World Cup and these topics were striking. For the World Cup its goal-line technology which came into action in the Japan v Columbia game earlier today and for the Banks it's Trade and Behaviour monitoring. When regulators consult and ask questions of firms around identifying conduct risk and building staff engagement it is coaching by any other name. You need the answers both on and off the field!
The discussions around some key themes could be straight from any of the national coaches striving to get their teams lifting the FIFA World Cup Trophy. The key takeaways were around the scale and pace of global regulatory change and the consequent growth of controls in the front line with new technology and more complex business models. Add to that our equivalent of VAR as we implement new compliance and surveillance technology, leading to the need for new and different skills in our teams. Then to be fully compliant you need strategic thinking and not just a plan. You do not win football matches with a box ticking exercise but with coherent joined up thinking when it comes to execution.
Following on from this, firms then need to actually build surveillance processes that aim to catch potential breaches before they occur and to flag up issues for review. You need a live view of the game as well as the replays! This is coupled with the banking equivalent of VAR is complex and the trick is to fine tune to avoid too many false positives being referred. Techniques to bring compliance with these important principles of ethical behaviour bear comparison to what our national teams are going through. Training and education of staff is as crucial in trading rooms as it is on the football pitch if you want to avoid defeats or a red card! Unfortunately, Columbia couldn’t quite do so. You can be certain pundits are analysing our moves just as closely as those agonising slow motion replays of activities on the pitch.
