On 15 November 2018, Norton Rose Fulbright co-sponsored the 1LoD Summit at The Dorchester hotel in London. The conference brought together over 250 senior members of the financial services community, with panels focussed on key areas such as governance, controls testing, surveillance and culture. A lot of time was spent discussing opportunities for improving the efficiency and effectiveness of controls across the three lines of defence.
John Davison, Head of Regulatory Compliance Consulting at Norton Rose Fulbright, joined the panel on supervision, which covered questions around:
- the extent to which automation can streamline the supervisory burden on sales and trading businesses and whether this is even desirable;
- the training supervisors require to discharge their responsibilities; and
- roles and responsibilities across the three lines of defence.
It was considered that, whilst automation can help alleviate burden in targeted areas, the industry is a long way away from technology reliance in this space and, as technology cannot yet model behaviour, human intuition remains critical to the process of supervision. As data quality continues to challenge organisations and is becoming of increasing focus for regulators, it may be more effective now for organisations to use technology to develop and align their data and analytics in a manner that makes it easier to target risk exposure and provide more coherent escalation from the front line through to senior management. This will help supervisors target key areas of risk exposure and focus their supervisory work accordingly. Triangulating data across different lines of defence and processes to provide a more consolidated data set will help provide a more streamlined and structured way of targeting resources.
Training, particularly role-based, targeted, face to face training, is considered key and the panel reflected the importance of understanding the different needs of individual supervisors when determining training delivery. It was felt that training is too often considered a remediation action or routing control, without it being properly aligned with the root cause of the issue or the individual needs of the recipient. There can also be too much separation between conduct, process and regulatory training, meaning that there can be a lack of coherence in the overall training message. Being creative in training delivery and finding a mechanism for measuring the success of training will help organisations ensure that messages are being received.
The rest of the day saw much discussion and debate, and we are already looking forward to 1LoD’s 2019 events.
If you would like to discuss supervision within your organisation, or any of the other topics on the conference’s agenda, please do get in touch.