Could you handle an FSA fine, asks Bob Young, managing director of Capital Home Loans
In years gone by, and certainly in the early days of mortgage regulation, many were want to question the activities of the FSA even suggesting it had little bite or appetite for dealing with the industry’s rule breakers. How things have changed. On any given week it is a rare occurrence not to find the regulator issuing a fine and/or banning firms and individuals from working in the sector. As it tackles fraud, arrears practices and all kinds of treating the customer unfairly action, if anyone deemed it to be in any way ‘toothless’ then I would have them down as delusional.
Which leaves all of us working in such a regulated environment with much to be wary of and plenty of expectations to live up to. It was suggested a while back that the regulator needed to be scarier and there will be those who view its ramping up of enforcement activity with a great degree of trepidation.
Of course, for those who are toeing the party line this sort of action will not keep you awake at night however, there are no excuses for not being on top of your game. Every single employee of an advisory firm has a responsibility to ensure their actions and that of the firm comply with the rules and regulations. If you’re a business owner then are you clear about all your employees’ actions, their responsibilities and whether they are acting untoward in any way, shape or form?
The truth of the matter on this is that the buck will stop with you and therefore if you are unaware of what is truly going on within your business then you are just as culpable as the wrong-doer. This is where correct and robust systems and controls will be vital processes which may seem like a chore will not seem so should they bring to light inappropriate advice or behaviour from members of staff.
We are particularly focused at CHL on creating the right work environment so as to ensure our employees can work efficiently and effectively however, part of this is also ensuring that we have the processes in place to highlight any mistakes and potential difficulties, having the ability to correct them quickly and if necessary take the appropriate action.
The question is, as a business are you confident you could do the same? In the past have your work problems been caught quickly or, in your experience, have they festered on and not been dealt with, exacerbating the difficulties for all concerned when the issues are eventually exposed? If so, and if you fear this may still be the case, then the time to act is now.
When push comes to shove, and regardless of the action that could be taken against any one individual, it will also be the firm that suffers from any censure. We should not under-estimate the reputational damage that can be inflicted right across the board and history is littered with firms that have not been able to recover from a public dressing-down.
The positive is that it is not too late to put the necessary systems and controls in place to deal with these problems – for every day that goes by without them, the risk also grows. As a business you need only look at the regular missives emanating from Canary Wharf to see the full extent of the punishments being meted out. Could your business handle a significant fine? It would almost certainly not recover from being banned. Therefore, take the time to make sure the business is fit for purpose and that your employees are all too aware of what is expected of them and the sanctions that can be employed if they do not play by the rules.