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The FCA is keeping a watchful eye on remote working
The coronavirus pandemic radically accelerated the shift towards working from home. It has been embraced by the financial services industry. A survey by Deloitte found that 70 per cent of UK financial services workers based in or near London rated their experience in working from home as positive. The top three reasons given for favouring home working were not having to commute, having more family time and having more time to exercise.
The same survey found that three-quarters (76 per cent) of workers felt they were as productive, or more productive, working from home. The top reasons cited for enhanced productivity were less commuting time, fewer distractions and a quieter working environment.
Working from home has proven largely successful, and it is clearly popular among employees. Firms now have systems in place to do it, and many firms plan to permanently implement policies which allow some element of home working.
The government is also actively making moves to encourage flexible working. A consultation has just closed on measures proposed to encourage flexible working and consult on making it the default unless employers have good reasons not to.
The Financial Conduct Authority’s (FCA) warning to firms – which also includes a threat that it may visit any place where regulated activity is carried out, including employees’ homes – is timely. It comes as the moves towards home working, often adopted as an emergency measure during the pandemic, are now being put on a more permanent footing. Home working means all employers need to think carefully about data security, confidentiality, isolation, workplace culture and management. However, the requirements for regulated firms are particularly stringent.
The FCA says that regulated firms considering remote or hybrid working “will be evaluated by us on a case-by-case basis”. It says those doing so “should be able to prove that the lack of a centralised location or remote working does not or is unlikely to” affect a range of factors. The “non-exhaustive” list set out by the FCA includes that home working should not “affect the firm’s location in the UK, or its ability to meet and continue to meet the threshold conditions for the regulated activities it has” and also should not:
- Prevent the FCA receiving information about a firm;
- Reduce the accuracy of the Financial Services (FS) Register;
- Affect the ability of the firm to oversee its functions;
- Cause detriment to consumers;
- Damage the integrity of the market;
- Increase the risk of financial crime;
- Reduce competition.
The FCA says firms must also be able to prove that they have plans to ensure there is “appropriate governance and oversight” and that an “appropriate culture” can be put in place and maintained in a remote working environment. Firms should be able to demonstrate compliance across all areas including control functions such as risk, compliance and internal audit. Among other matters listed, a firm should be able to show that:
- It has considered any data, cyber and security risks, particularly as staff may transport confidential material and laptops more frequently in a hybrid arrangement;
- It has appropriate record keeping procedures in place;
- It can meet and continue to meet any specific regulatory requirements, such as call recordings, order and trade surveillance, and consumers being able to access services;
- It has considered the effect on staff, including wellbeing, training and diversity and inclusion matters.
The IT systems enabling home working must also be “robust”. In short, there are no special exemptions for home working – firms must ensure that work done in employees’ homes is fully compliant.
Published in People Management – 15 December 2021
Disclaimer: Nothing in the Legal Insights section and this blog is intended to provide legal or other professional advice and, if readers are interested, they should consider taking separate legal or other professional advice accordingly.
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