Protecting your financial firm’s culture and reputation in 2021.

29th June 2021 by Brielle Hewitt

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Protecting your firm

We’ve written before about the importance of building a strong culture within your firm, moving from a top-down, management-led culture towards one that fosters personal responsibility. Achieving a culture based on ‘tone from within’ is difficult, but if done correctly it makes the role of compliance professionals much easier and helps to protect your firm from misconduct emerging internally 

But what about the external pressures on your organisation and, by extension, its reputation? We hosted a panel with The Broker Club to discuss, with input experts from inside and outside the industry. Here’s what they had to say: 

Control your messages 

As companies pay ever greater attention to their impact – both in terms of ESG factors, but also in areas such as work-life balance and the mental health of their workers – culture and reputation are becoming an increasingly important part of everyday business. This is true even where their effect on the bottom line isn’t immediately clear. 

This is doubly true in financial services which include broking, regulated under the FCA’s principles-based approach, said Cheryl Lock, Head of Compliance and MLRO at Banco do Brasil’s BB Securities Limited: 

“Culture is not something you can just check a box and say ‘yes, we do it,” she said. “It’s very much based on how you do things. What I’ve found in broking is how you service your clients is your competitive advantage.” 

But this is not just a symptom of having a principles-based regulator. Indeed, as it has become more commonplace for celebrities, athletes, or well-known figures from the business world to get ‘cancelled’ as a result of things they have said or done, clients have grown warier of doing business with anyone who might present reputational risk. 

Philip Grindel, director at intelligence and threat specialist Defuse, said his company was being approached more and more by wealthy individuals or private companies to investigate the people with whom they were considering doing business, such as brokers or wealth managers. This, of course, can cut both ways, and firms would be wise to make sure they have done a sensible level of due diligence on their own clients to prevent being tarnished by association. 

“Your reputation can be shattered by something that you have no control over, something somebody said a long time ago,” he said. “Whether we like it or not, that’s the reality of where we are now in business.” 

Forewarned is forearmed 

Such action can sound extreme, but the underlying principle of such due diligence is to minimise the harm to your firm and clients should something negative come to light. This could relate to clients, but Grindell noted that competitors also frequently carry out investigations as a way to keep rival firms on the back foot. 

Rather than engaging in similar mud-slinging, the response he proposes is a kind of proactive self-investigation. Make an effort to find out about anything that could end up being used to cast your firm in a negative light, and take action to respond to it and turn it into a positive. 

This point was echoed by Katherine Leaman, Managing Director of Leaman Crellin, who added that often things that can’t be found in the public domain end up in the hands of the regulator anyway, as individuals pass the information along. 

“You are in a far stronger place if you can find that information for yourself and own it. That way, you can actually think through how to handle it and turn it into the best possible outcome for everybody.” 

Remember your priorities 

It’s easy to see how some initial action to protect against internal threats could spiral, leading to a kind of institutional paranoia within your firm. It’s crucial to keep perspective, however, and remember that the ultimate purpose of the business is to serve its clients. 

The way to do this is to always remain focused on which threats and regulations are most applicable to your firm, and present them to colleagues in a way that empowers them to handle them. 

“The Compliance Department is not a business prevention office,” said Lock. “We’re there to help Firms keep their profits. Where possible, we’re supposed to act as a support function as well as a regulated requirement in a firm.” 

She added: “When you deliver training, make it relevant to the current regulation, what things are people getting sanctioned for now?” 

On this point, we are optimistic that, as people begin to navigate the return to the office and the potential pitfalls that accompany that shift, firms and employees have gained a newfound appreciation of how compliance and risk professionals can be a helpful guide. The last 18 months have been an awakening for everybody and it could be that the compliance team is everyone’s new best friend, helping them to navigate the difficult social and political environment. People may be more ready and receptive. 

Ultimately, the solution to a firm’s challenges, be they reputational or regulatory, internal or external, the answer is never to bury your head in the sand.

Our Platform can help you to remain proactive by automatically monitoring and risk ranking all communications in and out of your firm, allowing you to focus only on the communications that pose a potential risk to your firm. If you would like to know more about how Fingerprint Supervision works, contact me, Sean Morgan – sean@fingerprint-supervision.com if you would like to contact any of our panelists on the topics raised in this article, their contact information is as follows: 

Katharine Leaman, Regulatory Compliance Specialist & MD @ Leaman Crellin katharine.leaman@leamancrellin.co.uk 

Philip Grindell MSc, Intelligence & Threat Specialist @ Defuse Global – philip@defuseglobal.com

Cheryl Lock, Head of Compliance & MLRO @ BB Securities Ltd. – cheryl.lock@bb.com.br


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