Author:  Heath  Buck,  7th  May  2015  

2015 impact of new Regulations on Financial Services HR Departments

This presentation explains some of the impact on HR departments of the new regulations on accountability from the FCA and PRA. If you work in a Financial Services HR Department and you believe your organisation might be affected you should seek support as soon as possible.

Author:  Heath  Buck,  7th  May  2015  

Previously….

Impact of Regulation Changes on HR in Financial Services

Now…. FCA  &  PRA  

Focus  on  a  small  number  of  individuals  

FCA  &  PRA  

Use  firms  as  mini-­‐regulators  to  ensure  fitness  &  propriety  of  staff  

Regulatory  Change  is  coming  in  3  @ers….

1.  Senior Manager’s Regime •  Replaces  the  current  Significant  Person  FuncAon  of  the  Approved  Persons  Regime.  •  Will  ensure  there  is  an  individual  accountable  for  every  regulated  acAvity.  •  Reverse  burden  of  proof  means  Senior  Managers  must  be  able  to  show  they  have  taken  reasonable  steps  to  prevent  

regulatory  breaches. 2.  Certification Regime

•  Is  a  new  Aer  of  people  who  perform  funcAons  which  represent  a  “significant  risk  or  harm”  to  the  firm  itself  or  customers  and  must  be  approved  as  fit  and  proper.  

•  The  firm  itself  carries  out  the  cerAficaAon. 3.  Conduct Rules

•  Will  cover  all  remaining  employees  except  staff  who’s  duty  would  be  the  same  in  any  industry  (e.g.  cleaners,  recepAon).  

The  above  regulaAons  may  transfer  a  lot  of  HR  acAviAes  from  following  discreAonary  objecAves  to  meeAng  compliance  requirements  as  shown  in  the  next  two  slides…  

Author:  Heath  Buck,  7th  May  2015  

Current people objectives across the employee journey

I  AM  RECRUITED  EMPLOYEE  JOURNEY  

ADDED  VALUE  OBJECTIVES  

COMPLIANCE  OBJECTIVES  

I  AM  MANAGED   I  EXIT  

Paid  correctly  and  on  Ame  

•  Objectives have been separated from tools (e.g. performance is an objective, appraisals are a tool) •  “Compliance” activities are something that must be done, where as “Added Value” does not have to be done, but the degree to which it is done could

impact the employer

Systems  access  iniAated  

Conduct  &  behaviours  

RemuneraAon  at  the  right  

level  

Performance  

Culture  

Succession  

Poor  staff  exited  

Finds  candidates  

Staff  developed  

Staff  handover  

Onboarding  

Systems  access  

Quality  candidates  sourced  

Systems  access  

removed  

Staff  engaged  

Employer  brand  

managed  

Compliance  training  

EffecAve  organisaAonal  

structure  

Employee  RelaAons  cases  

managed  

Management  within  legal  parameters  

Lawful  exit  (fair  dismissal  

process)  

Exit  data  gathered  Clear  

responsibiliAes  for  each  job  

Quality  candidates  selected  

Suppliers  managed  

Return  of  company  equipment  

Background  checks  

People  Strategy  

Employers have had a lot of discretion on how they manage their people. The HR function was an additional cost base which would be invested in if the employer felt it would add enough value.

Author:  Heath  Buck,  7th  May  2015  

Regulations impact!

I  AM  RECRUITED  EMPLOYEE  JOURNEY  

ADDED  VALUE  OBJECTIVES  

COMPLIANCE  OBJECTIVES  

I  AM  MANAGED   I  EXIT  

Paid  correctly  and  on  Ame  

Systems  access  iniAated  

Conduct  &  behaviours  

RemuneraAon  at  the  right  

level  

Performance  

Culture  

Succession  

Poor  staff  exited  

Finds  candidates  

Staff  developed  

Staff  handover  

Onboarding  

Systems  access  

Quality  candidates  sourced  

Systems  access  

removed  

Staff  engaged  

Employer  brand  

managed  

Compliance  training  

EffecAve  organisaAonal  

structure  

Employee  RelaAons  cases  

managed  

Management  within  legal  parameters  

Lawful  exit  (fair  dismissal  

process)  

Exit  data  gathered  

Quality  candidates  selected  

Suppliers  managed  

Return  of  company  equipment  

Background  checks  

People  Strategy  

Employers will now be expected to prove to the regulator certain activities will be taking place.

Some of the “added value objectives” will have an impact on “compliance objectives” that they could also be moved into that section (e.g. performance, succession).

Clear  responsibiliAes  for  each  job  

Author:  Heath  Buck,  7th  May  2015  

What you should be doing next…

Item   Ac@on  The  regulaAons  are  not  yet  final!   Ensure  a  good  regulatory  feedback  loop.  Work  with  retained  lawyers  or  other  financial  regulaAon  

experts,  HR’s  job  is  to  translate  their  experAse  into  a  tacAcal  plan  for  the  firm.  

Become  friends  with  risk/compliance  

Risk,  compliance,  and  HR  will  all  need  a  strong  harmonious  relaAonship  to  deliver  the  requirements  of  the  new  regime,  start  to  setup  those  workshops,  meeAngs,  and  discussion  groups.  

IdenAfy  individuals  who  will  be  captured  by  the  new  regulaAons  

Start  to  coach  them  through  the  likely  impact.  Understand  what  support  they  will  need.  Ensure  they  are  ready  for  the  incoming    

Define  reporAng  lines  and  responsibiliAes  

All  regulated  acAviAes  should  be  assigned  to  an  individual  who  has  responsibility.  Start  working  on  the  assumpAon  the  “prescribed  responsibiliAes”  will  come  into  force  and  any  transiAon  is  likely  to  be  smoother.  

Processes   What  happens  and  when?  How  are  new  people  captured?  What  trigger’s  a  report  to  the  regulator  of  non-­‐compliance?  There  needs  to  be  clear  workable  processes.  

Systems!   With  the  reverse  burden  of  proof  you  will  need  evidence  of  compliance  (responsibility  map  should  be  in  a  single  up  to  date  document,  you  must  demonstrate  reasonable  steps  taken  to  comply).  To  avoid  be  swallowed  by  administraAon  you  will  need  systems  to  manage  your  evidence  base.  

Training   Start  a  rolling  training  program:  -­‐  New  employees  will  need  inducAons.  -­‐  How  will  you  cerAficate  new  employees  (you  have  4  weeks  to  do  so!)  -­‐  What  core  training  is  needed  to  ensure  compliance  -­‐  Provide  guidance  manuals  and  support  for  senior  managers  

Equip  your  HR  team   HR  will  need  a  logical  and  systemaAc  approach  if  they  are  to  deliver  compliance  without  becoming  overwhelmed  with  work.  This  may  require  support  and  training.  You  might  need  to  consider  taking  on  addiAonal  support  for  an  interim  period  to  deliver  what  is  needed.  This  affects  your  most  senior  stakeholders  –  gedng  it  right  is  essenAal!  

Author:  Heath  Buck,  7th  May  2015  

Appendix 1 - HR Tools

Employment Contracts

Background checking

Management Advice

Occupational Health

Coaching

Appraisals

HR Systems

Recruitment

E-Learning

Training

Whistleblowing

Exit Interviews

Policies

Management information and reporting HR Admin

To provide clarity on the difference between HR objectives and HR tools used to achieve those objectives, I have included a list of the primary tools HR departments use. Different departments will use a different mix of tools according to their needs and resources.

The tools highlighted in red are likely to rise in prominence when the new regulations are implemented.

Author:  Heath  Buck,  7th  May  2015  

Appendix 2 - Heath Buck Overview

Profile: Request my CV for full details. My Linked In profile shows my work based references from Board Directors and Heads Of HR that I have previously devlivered for: heps://uk.linkedin.com/in/heathbuck  

•  Successful HR generalist with experience of managing HR departments through periods of significant change.

•  Lead financial services HR teams through significant HR controls audits to receive performance awards for our improved delivery.

•  Performance award from Barclays for delivery of HR response to an FCA skilled persons audit.

•  6-Sigma and PRINCE2 project management qualified.

Financial sector companies I have worked with include: •  NEST Pension Fund (National Employment Savings Trust) •  Barclays Bank •  Mizuho Corporate Bank •  State Street Bank and Trust