The Bank of England’s recent publication of a Final Notice in respect of Vocalink Limited provides a number of key takeaways for regulated firms in relation to remediation programmes and delivering on regulatory expectations.  A summary of these is set out below but for more detail on the Final Notice see our Notice in a Nutshell.

  1. Consequences of breaching a regulatory requirement: At one level, this decision is the latest in a series of sanctions imposed on firms for failing to comply with regulatory requirements and/or providing inaccurate confirmations to the regulator regarding work completed.  Regulators are increasingly making use of their supervisory tools in order to incentivise compliance and the significant level of the penalty (together with all the other consequences of regulatory enforcement action) underscores the importance of devoting adequate time and resources to delivery. 
  2. Scoping is key: A remediation programme or an assurance review is only as good as its scope.  Spending time up front making sure that the scope of any such project is adequate and meets the required objectives so that the project delivers what is needed will be well spent.  In some scenarios, it may be worth obtaining some independent validation on scoping to provide added reassurance that the project is heading in the right direction.
  3. Governance, governance, governance: Good governance is essential to keep remediation projects on track and avoid them creating more issues for the firm.  This can be harder to achieve than it seems and goes beyond implementing structures such as committees and reporting.  Key elements of any governance structure include: (i) ensuing that information about matters such as progress and timing is escalated appropriately to the relevant stakeholders and the board so as to ensure that decisions and external communications are properly informed; and (ii) ensuring that key decisions, such as scope changes, are made formally within the firm’s governance structure, documented and communicated appropriately.
  4. Warning signs: Where concerns are raised internally or by third parties, these need to be taken seriously, investigated appropriately and acted upon where necessary.  Failure to do so may itself be taken as evidence of inadequate controls. 

If you would like any more information on the issues raised in this blog please do not hesitate to contact the author. For further knowledge resources in this area, please see our dedicated Financial services interventions and investigations hub.