Macfarlanes

FCA priorities for buy-side and sell-side institutions

The recently published Financial Conduct Authority (FCA) business plan and risk outlook for 2014 contain some instructive pointers for institutions on both the buy-side and the sell-side — in particular highlighting some of the specific areas of forthcoming thematic focus.

The FCA will continue to expect to see firms embedding a culture that promotes clients’ best interests and market integrity. In particular, the regulator will wish to observe demonstrable evidence that clients’ interests feature sufficiently prominently in firm’s business models and strategies and are a central consideration when, for example, a new product or business line is being contemplated.

By its nature, culture can be an inherently difficult concept to measure and gauge. In assessing culture, the FCA will look for certain signs that are often regarded as culturally indicative — for example how a firm responded to a known material regulatory issue. The attached annex suggests some key cultural indicators — providing a practical framework against which firms might usefully benchmark themselves…

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