Compliance during Covid 19 - Episode 6

Caleb Hawkins 29.05.2020

Caleb Hawkins, head of our compliance and legal desks, speaks to Philippe Reverre, ex Director of Assurance and Training at Barclays and Head of Compliance for HSBC France global banking and markets.

Throughout this ‘Compliance During Covid-19’ series, Caleb interviews a number of compliance professionals and experts around the market to get their insight around the market during Covid-19. 

In episode 6 Caleb speaks with Philippe Reverre, ex Director of Assurance and Training at Barclays and Head of Compliance for HSBC France global banking and markets.

What effect do you think Covid-19 is having on the general financial market?

Significant increase of the volatilities in certain markets (equity being a good example). Drastic increase in the volumes traded over the last months and potentially in a near future.

Short term speculative risk.

Emphasis on the importance of first line supervision (and second line to a certain extent) to detect non compliant behaviors and mitigate conduct risk as effectively and quickly as possible.

Importance of controls and the reactivity of the surveillance / assurance functions. In the assurance space, will it mean shorter and more assertive assignments and a shorter cycle (between planning and execution), probably? Can we wait 2 to 4 months for the conclusions of an audit or a review in the current environment, I am not sure.

Obvious increase in the materiality of a number of risks including operational risk and IT.

Weaknesses in the infrastructures (IT, production, wfh, hot lines…) are becoming immediately visible.

Has covid-19 affected the compliance market from what you have seen?

Recruitment takes longer than before or has even been temporarily paused for a few months.

Remote interviews (over the phone or through video) can change the type of interactions between the interviewer and the interviewee (colder?) and sometimes the type of questions especially over the phone (no access to body language). Risk of interviews more technical and less human. Difficult to gauge the seniority and readiness of the interviewee? 

What effect do you think covid-19 has had on the regulation calendar - for example SFTR? - Do you see it also affecting the next hot regulatory topics set for release?

Some regulations might be paused or delayed. It does not mean that they will not be implemented and embedded, but the regulators (FCA, BAFIN, AMF…) are currently planning to stick to a stringent risk based approach and will reevaluate and revisit their roadmap in light of the COVID 19 impacts.

You might also see new regulations popping up, rather sooner than later. In the surveillance space, voice is being recorded and monitored, but what about video? This is a brand new media that is not monitored or watched, but video could be used dishonestly (risks of market abuse, anti competition…).

Investigations and on site audits from regulators have also been paused. It creates a certain level of uncertainty at the institutions. When will everything be resumed? How long will it take then?

What are your thoughts on hiring within compliance now and the future?

The need for qualified resources and recruitments will not slow down. 

In the perm space:

  • Recruiting a candidate will take longer than before;
  • The capacity to work from home will also be checked; and
  • Targeted priority is to be given to infrastructure (and the compliance coming with it) and controls (same, compliance as well).

In the temp space:

  • We might even have a higher demand in certain fields isn’t it? Security, IT, Surveillance, Assurance. Are all the institutions up to speed both technically (security, IT) and in the monitoring spaces? I am not sure. Especially small players, niche boutiques, maybe "buy side" also will need to recruit at least temporarily a few experts; and
  • You will also have a number of external audits and tests of robustness of the various set ups developed and implemented (distant access, design of the workflow, effectiveness of the controls…). This will be more for the big 5, I guess but not only. Not immediately but in the 6 to 12 coming months?

How do you continue to be relevant for the business, remotely? (e.g. remote training, other initiatives)

It is not as if the front office activity had stopped. It means that all the support functions, including Compliance have to keep the pace and work in a BAU mode.

I think that more perceived freedom for everyone (the wfh protocols and resulting autonomy) means more risks, therefore more controls should be defined.

The formula could be «  FREEDOM = (AUTONOMY + RISK) x CONTROLS », isn’t?!

Missed episode 1

Missed episode 2

Missed episode 3

Missed episode 4

Missed episode 5

If you wish to give your thoughts or opinions on the market over these uncertain and unprecedented times, then please reach out to Caleb Hawkins at chawkins@morganmckinley.com.

Caleb Hawkins's picture
Head of Compliance & Legal Temporary Recruitment
chawkins@morganmckinley.com

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