Hybrid working - now the FCA publishes its compliance expectations

The Financial Conduct Authority (FCA) has published details of its expectations for firms implementing remote or hybrid working models.

While most employers are considering some form of hybrid (or agile) working due to COVID-19 and the post pandemic 'war on talent', they do so in the absence of a statutory or regulatory framework. In that light it is surprising that the FCA has published its expectations for regulated entities to consider when designing their hybrid working plans.

Regulated firms, those applying to be authorised or registered and those proposing to submit further applications will now need to ensure any remote working arrangements do not risk or compromise their ability to follow all rules, regulatory standards and obligations, or might conceivably lead to a failure to meet them, specifically;

  • How key functions will be performed, overseen and based
  • The location of senior managers and their plans to oversee activities
  • The period arrangements are expected to last (if not permanent)
  • Business continuity plans
  • Plans for compliance reviews to ensure the working model is functioning well

The FCA expectations are broadly drafted; fluid and will continue to evolve as its understanding of firms hybrid working models increases. That does not assist in any practical sense – as the expectation is stated but with no clear guidance on how, or what to implement. While the guidance is not exhaustive and firms will be evaluated on a case-by-case basis, it is clear that international firms should continue to have an establishment or physical presence in the UK. The ALG Employment team view then for international and national practices, is as follows:

Key considerations for planning and communication

  • Firms should be able to prove that their remote working plans do not affect their location in the UK, or ability to meet and continue to meet the threshold conditions for any regulated activities it has or will have permission for.
  • Remote working plans should not cause detriment to consumers, damage the integrity of the market, reduce competition or increase the risk of financial crime.
  • Evidence of satisfactory planning includes consideration of the impact on staff wellbeing, training and diversity and inclusion.
  • The FCA has the power to visit any location where work is performed, business is carried out and employees are based – including residential addresses – for regulatory purposes.
  • The FCA's Principles for Business require firms to deal with the FCA in an 'open and cooperative way' and to disclose anything relating to the firm which it would reasonably expect notice of.

ALG's Belfast Employment team routinely assist regulated entities with all aspects of FCA compliance, including the Senior Managers regime and specific regulatory requirements. Our ability to leverage the support of our Financial Regulation department (the only such offering in Northern Ireland) means we are uniquely positioned to provide pragmatic full-service support to firms and ensure that any plans to adapt their working practices continue to meet regulatory responsibilities as well as employment law contractual obligations.

For more information please contact any member of ALG's Belfast Employment team.  

Date published: 15 November 2021