This week’s round up of news for the compliance, risk and legal sectors in financial services
The Independent has reported that four in ten UK companies will be forced to trigger their contingency plans if no clarity is given on the Brexit deal. In a survey by the Confederation of British Industry they found that 80% of companies think that Brexit has already had a negative impact on investment decisions. A reluctance to invest could have a knock-on effect for jobs, wages and living standards as less money would be available for vital public services. ‘Almost a fifth of firms have said they have already been forced to trigger contingency plans’ which includes cutting jobs, relocating production and services overseas and stockpiling goods. The EU’s chief negotiator Michel Barnier is ‘still not sure’ that a withdrawal agreement will be reached, and this uncertainty is draining investment from the UK, negatively affecting 8 in 10 businesses.
The Office of National Statistics has published a report showing that cybercrime has fallen by 30% in the past year. However, this isn’t necessarily a true reflection on the current threat that we are all faced with. ‘All other indicators are that cybercrime is on the increase’ and it is claimed that ‘fraud and computer hacking are ten times more common than burglary’. Smash and grab antics, such as billions of phishing messages, make up the majority of cyberattacks; and we all have to seriously start thinking about cybersecurity by being vigilant online, careful with what we share and avoiding clicking on unknown links, otherwise cybercrime will continue to rise.
The Financial Times has this week informed us that the Royal Bank of Scotland has set aside £2bn for small businesses due to the uncertainty around Brexit. The money is set to be used to provide trade finance, term finance and increased liquidity services for small firms that rely heavily on EU labour markets. The bank has said that they will be contacting approximately 2,000 existing RBS and NatWest customers that they think will benefit from this service. The £2bn RBS fund will be added to an existing £1bn ‘growth funding’ programme that was announced earlier in the year.
The Financial Times has also reported on a former compliance officer of UBS, Fabiana Abdel-Malek, who will stand trial for 10 counts of insider trading later this week. She is taking the stand alongside Walid Choucair whom the Financial Conduct Authority accuses of using the inside information passed to him by Fabiana to place trades in stocks, resulting in a profit of over £1m. Both defendants deny the charges and could be facing a maximum seven-year jail sentence.
In the UK’s financial market, suspicious trades have reached their highest level in eight years, and the FCA is currently investigating 87 live cases. An unfavourable comparison with the United States, who’s main securities regulator raised only 41 insider-trading cases last year.
‘Gender inequity in the financial services industry is so severe that nearly nine in 10 women expect tending to family obligations will hurt them career wise’, reports the Payment Source. From a survey conducted by Visa and Money2020, there was an overall finding that men are more likely to have an ‘outsized positive view on progress in gender inclusion’. An example of this being that 68% of men predict the number of women in senior levels will increase over the next few years, but only 45% of women have agreed with this. It was also found that only 62% of the female respondents would feel welcomed back into their role after maternity leave, and that only 28% said they feel that men and women are equally paid for the same job in their company.
‘The survey showed a persistent gap in the perception of inclusiveness within companies and the pace of change’, despite a large amount of research showing that more diverse companies perform better. This survey is anticipated to be completed annually in order to track whether the industry’s talk of change is resulting in a more inclusive environment.
LATTICE80 has announced the expansion of its Fintech Hub to Hong Kong and it will also host the Blockchain Accelerator Program to support the United Nations’ 17 Sustainable Development Goals (SGDs). The company is the world’s largest fintech hub which connects Fintech Startups, Financial Institutions & Corporates, Government Institutions and the Public. Joe Seunghyun, Co-founder and Founding CEO of the company commented ‘We believe Hong Kong is the right place to be a connection point for Belt and Road Initiative. Hong Kong, being a traditional financial and trading hub to connect Asia and Europe, has the world’s best exit market and access to global investors that budding fintech and blockchain startups would look for’.
David Wagner at Forbes has this week reported on how LinkedIn accounts could threaten company’s compliance strategies. As even larger amounts of information are being inputted into LinkedIn, some of which falls under current or upcoming regulations, companies should be managing their accounts to ensure that this asset does not become a liability. LinkedIn now contains ‘reams of potentially sensitive and regulated information’ that should be preserved in an archive for both legal and compliance reasons. Company’s should look for strategies that make their compliance more efficient, while encouraging employees to continue using LinkedIn, instead of putting strict limits on its use. ‘Better compliance management isn’t only about appeasing regulators; it’s about keeping costs in check, ensuring operational efficiency and maximising the value of all communications’.
Microsoft has announced plans to sell artificial intelligence and other technology to the US Military. City A.M. reported that the race between the US and China to build next-generation security technology has sparked the debate about AI use in the military. The CEO of Amazon has also shown his support for the US military and his company are the favourites for a cloud computing contract with the Pentagon, alongside Microsoft. A number of people are however opposed to tech companies having an involvement in the military and federal law enforcement.
The Irish Times has reported on low levels of diversity being a major problem with banks and other financial services firms. A lack of diversity among key decision makers and at senior levels creates risks and inhibits necessary culture change. When similar people in similar situations are given similar information, they are likely to make very similar decision and this type of ‘groupthink contributed to the depth of the financial crisis’ as well as the many conduct scandals that followed. Gender diversity is only one aspect of diversity but remains a very important one. Women are seriously under-represented at senior levels across all financial services, and at the end of 2017 men had been appointed nine out of 10 of these influential positions. ‘The financial services industry needs to be in a position to attract, retain and harness the talent and contributions from the broadest possible range of staff to innovate and compete’.