In brief

In an article published in Compliance & Risk Journal, John Bracken and Lorren Martin explore the issue of non-financial misconduct in UK financial services firms, and how best to manage the potential risks.

• Regulated firms need to ensure their practices for dealing with non-financial misconduct are robust and transparent. This article explains why this is a key area of focus for regulators, what firms can do to ensure they are prepared, and how to investigate these types of matters in practice.
• Non-financial misconduct (inappropriate behaviour within a financial services firm which does not directly relate to its financial business activities) is seen as an indicator of poor culture within a firm, meaning there is likely to be an increased risk of poor decision-making, and/or activities in breach of regulatory standards.
• Firms should do more to identify and address non-financial misconduct through internal policies and procedures, record keeping, proactive intervention and consistency of sanctions.
• A proper investigatory process needs to be clear as to the nature of the complaint, and the objective of the investigation. Firms should consider who (internally or externally) should carry out the process, and take care when dealing with vulnerable or reluctant witnesses. There may also be regulatory and criminal aspects to bear in mind.

Click here to read the full article. It was published in Compliance & Risk Journal, volume 12, issue 4.

For advice or to discuss what this means for you and your business, please get in touch with your usual Baker McKenzie contact.