FCA remote working oversight to include home visits

12 October 2021

The Financial Conduct Authority has warned that employees of financial services firms could be visited at home to have their work overseen, as it sets out its latest expectations for remote and hybrid working.

The City watchdog said firms considering permanent remote or hybrid working will be evaluated on a case-by-case basis and should be prepared to have their plans reviewed by the FCA.

In an update published this week, the FCA said firms must be able to prove that the lack of centralised location or remote working will not affect its ability to meet regulations, impede its ability to oversee its functions, cause detriment to consumers or damage the integrity of the market.

Firms will also need to ensure their plans for hybrid or remote working do not increase the risk of financial crime or reduce competition in the market.

The FCA said firms should also be able to prove that a hybrid working model will not prevent the FCA from receiving information about the firm or reduce the accuracy of the Financial Services Register for others if, for example, consumers are not able to contact the firms at the place of business shown on the FS Register.

Firms will also need to ensure that control functions such as risk, compliance and internal audit can carry out their functions unaffected and the firm has considered any data, cyber and security risks that remote working poses, particularly if staff transport confidential material and laptops between locations. There should be sufficient systems and controls, including the necessary IT functionality, to support all of these factors.

As more firms transition to a hybrid model, they will also need to ensure there is appropriate governance and oversight by senior managers under the Senior Managers regime.

In addition, firms must also ensure that an appropriate culture can be put in place and maintained in a remote working environment and the effect on staff, including wellbeing, training and diversity and inclusion is considered.

The FCA said in a statement: “It’s important any form of remote or hybrid working adopted should not risk or compromise the firm’s ability to follow all rules, regulatory standards and obligations or lead to a failure to meet them.

“We should be able to access firms’ sites, records and employees. It’s important that firms are prepared and take responsibility to ensure employees understand that the FCA has powers to visit any location where work is performed including residential addresses for regulatory purposes. This includes supervisory and enforcement visits.”

The FCA said that under Principle 11 of the FCA’s Principles for Businesses, firms are required to disclose any changes to how they operate.

For firms applying to be authorised or registered, they will need to continue to meet the threshold conditions in Schedule 6 Part 1B of FSMA, but will need to include the arrangements for remote working in the application.

Professional Paraplanner