The FCA has published its expectations of firms working remotely or with hybrid working models so that they can continue to meet their regulatory responsibilities.
The regulator has recognised that many firms are already familiar with working in a remote environment and adapting their systems and controls as a result of the Covid-19 pandemic, and understands that many firms will now continue these ways of working.
A firm that is planning to work remotely or in a hybrid model needs to consider:
- How it will operate its business – The firm will need to prove that there has been satisfactory planning involved in changes to working arrangements. Firms will also need to prove that remote working will not:
- Affect its location in the UK, or its ability to meet and continue to meet the threshold conditions for the regulated activities it has or will have permission for – or any equivalent requirements, where these do not apply.
- Prevent the regulator receiving information about the firm.
- Reduce the accuracy of the Financial Services (FS) Register.
- Affect the ability of the firm to oversee its functions, including any outsourced functions.
- Cause detriment to customers.
- Damage the integrity of the market.
- Increase the financial crime risk.
- Reduce competition.
- Engagement with the FCA – for example, will the firm’s details on the FS Register need to be updated? The FCA should be able to access firms’ sites, records and employees.
- Notifying the FCA of changes to working arrangements – Principle 11 of the FCA’s Principles for Businesses states that, “A firm must deal with its regulators in an open and cooperative way, and must disclose to the FCA appropriately anything relating to the firm of which that regulator would reasonably expect notice.”
For firms that are applying to be authorised or registered, their application will need to cover certain details (if applicable) such as: remote working arrangements, the legal implications of these arrangements, the location of senior managers, how key functions will be performed and overseen etc. This is not an exhaustive list and, ultimately, the information required by the FCA will depend on the firm’s business model and how it intends to operate.
If you need advice on any of the above, please contact your RWA Business Manager or email firstname.lastname@example.org.