On 8 February 2023, the FCA published a speech by its Chief Operating Officer (COO) and Executive Director of Authorisations, Emily Sheppard on “How to organise a COO”. In her speech, Ms Sheppard shares some of her experience as an industry COO.  

An open culture

Firstly, Ms Sheppard highlights the need for COOs to use the levers of ‘soft’ power such as open communication as much as ‘hard’ power such as data and rules to mitigate non-financial risk. She notes the importance of informal conversations, of asking questions and of getting people to talk early on before they become too institutionalised.

Diversity and inclusion

Ms Sheppard flags that whilst many firms are great at making sure that they have a diverse workforce, they are not so good at inclusion. Diversity and inclusion is about far more than targets – true inclusion means that people feel free to speak out.

More action on ESG

One area of non-financial risk that Ms Sheppard raises as needing more work is in environmental, social and governance (ESG). The role of the COO is to demonstrate integrity in their firm’s products, people and promises. The FCA wants to clamp down on greenwashing and consider how to incentivise best practice and will, in the coming days, publish a paper on the role regulations can play in driving positive change.

Focus on clients

Ms Sheppard reminds firms that now is a good time to line up their distributors and other third parties to make sure they understand the principles and practice of the Consumer Duty. The FCA asks that firms put clients at the centre of the products and services offered and that they can demonstrate the decision-making process around that. The FCA also asks that the information firms provide is clear and relevant to their target market.

Agility, assertiveness, innovation

To conclude her speech, Ms Sheppard notes that the FCA is an innovator as much as a regulator, embracing change and helping new industries flourish while protecting consumers from harm. She reminds COOs that they will have to deploy at speed traits that are needed at times of more radical changes, ensuring they are agile, assertive and innovative in how they deal with people and risks and that they have tested their operational resilience plans.