Compliance officer fine is a ‘game changer’ in the financial services regulatory landscape
The insurance industry has been warned that a £75,000 fine on a compliance officer is a ’gamechanger’ and now firms must make sure they keep a watchful eye and get independent checks on their compliance staff.
Compliance officer David Watters was hit with the fine for ’failing to exercise due skill, care and diligence’ while compliance oversight officer.
His blunders took place at Belfast-based firms FGS McClure Watters (FGS) and Lanyon Astor Buller Ltd (LAB).
Watters failed to ensure that advice on Enhanced Transfer Value pension transfer was up to scratch.
It meant many of around 500 customers lost guaranteed benefits when transferring from a defined benefit pension scheme to a defined contribution scheme.
The result of all this is that insurers, brokers and other financial services firms must make sure they have oversight of their compliance officers - and crucially, this must include an independent assessment.
Gary Dixon, a partner with compliance consultants MomentumGRC, said: “While many, many firms have been fined in the past for compliance failings, and indeed some have been fined repeatedly, the singling out here and fining of an individual compliance officer for such a large amount is a game changer.
“The clear message to regulated firms is that compliance needs to be a boardroom issue and they can’t simply dump it on one person and forget about it.
“In my experience the vast majority of compliance officers do a good job in difficult circumstances, but the FCA is clear that however good a job they think they are doing, when areas are complex or contentious, they need to get an independent check to verify suitability or risk serious comebacks later on.
“For those officers who are out of their depth and struggling, they need to act quickly to prevent a similar misfortune for them and their firm’s clients. Robust systems are needed alongside a strong independent assessment as the best way of demonstrating their firm is meeting standards.”