On 7 February 2024 the FCA published a letter to all regulated Lloyd’s managing agents, London market insurers and Lloyd’s and London market brokers and MGAs (dated 6 February 2024), requesting information relating to incidents of non-financial misconduct. Culture and non-financial misconduct clearly remain focus areas for the FCA.
Key points to note from the FCA’s letter:
- This is not a voluntary request: the FCA has elected to exercise its powers section 165 FSMA to formally request the relevant data from firms, failure to comply with such a request risks being found in contempt of court.
- The data requested spans three years: the FCA’s survey asks for aggregated statistics for the years 2021,2022 and 2023, including the number of incidents, the method by which these were recorded, and the outcome.
- The data provided by respondent firms should include incidents that have not already reported to the FCA.
- The FCA has requested that firms distinguish between statistics relating to SMFs and non SMFs when providing their response.
- The regulator has reiterated its expectations that firms should have effective systems and controls in place to identify and mitigate risks relating to non-financial misconduct, as well as having internal procedures in place to investigate allegations promptly and fairly and to take appropriate action where allegations are upheld.
- The data collected is to inform its ongoing supervisory work programme across multiple wholesale market sectors in connection with the FCA’s focus on culture and non-financial misconduct.
The letter highlights the importance of robust governance and record keeping: firms should ensure that any decisions relating to conduct issues are appropriately challenged and recorded, including any subsequent investigation or consideration relating to the fitness and propriety of senior individuals or with regards to disciplinary action.
Firms have until COB 5 March 2024 to respond to the survey and should get in touch with the FCA as soon as possible if for any reason they may not be able to provide all of the information requested, or will not be able to do so by the stipulated deadline.