At a time when compliance heads are trying to read the tea leaves and predict how regulators will treat them in the past 15 weeks, there have been two clear, noteworthy messages from senior regulators on both sides of the Atlantic.
In the United States, Raphael Bostic, the CEO and President of the Federal Reserve Bank of Atlanta, was extremely helpful to the regulated community when he told the Wall Street Journal that his agency would not penalize banks for “emergency decisions” made in response to the pandemic.
“We’ve tried to be as clear as possible that we will remember that banks have operated in an emergency situation, have made emergency decisions, and we won’t penalize them for that nine to 12 months from now when we do our regulatory reviews,” Bostic said. “I’m going to make sure we hold to that.”
His remarks were very much designed to encourage banks to do their utmost to help their customers through a very tough time.
In the United Kingdom, Chris Woolard, the interim chief executive of the Financial Conduct Authority, admitted that the new conditions were the first real test of corporate banking rules designed after the 2008 financial crisis. He added that the regulator’s ability to take action was currently “limited.”
He qualified this stark admission with a strong hint about how the regulator would instead be deploying the latest tool in its regulatory toolkit, the Senior Managers’ and Certification Regime (SMR). The added spice is its impact on individual liability. He told the Financial Times, this time “is the first real test of SMR.” Woolard said it allows the regulator to pry into previously unseen parts of a firm’s business.
“One thing I have said, both inside and outside the FCA, is that I am utterly determined not to see the kind of misconduct we have seen in the past,” Woolard said.
Busy compliance officers are coping remarkably well with volatile markets, a distributed team, new technology, and a front office over which they have limited physical oversight. These clear messages from regulators help compliance officers do their jobs and gain comfort at a time when there is so much uncertainty.
On July 16 (EU) and July 23 (US), we will host the next chapter of our Modern Compliance Webinar series, “Regulators — Relief, Relations, Resilience, and the Road Ahead.” The webinar will cover the extent to which firms can rely on sympathy and forgiveness from their regulators in this extraordinary time. It will also cover areas of zero tolerance where regulators will be as exacting as ever.
Our speakers will provide guidance on how best to communicate with regulators, how the environment may change in the future, and the sort of retrospective reviews all compliance people must consider to future-proof their firm. We hope you will join us.
To learn more and register, please visit: