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UK financial regulator lays out expectations for remote and hybrid working

Out-Law News | 19 Oct 2021 | 2:06 pm | 2 min. read

The UK’s Financial Conduct Authority (FCA) has set out what it expects regulated firms to consider if staff are continuing to work remotely or in a hybrid manner in the wake of the pandemic.

The FCA’s ‘remote or hybrid working expectations for firms’ apply to existing firms, as well as those seeking to be regulated or changing the conditions of their regulation. The regulator said the expectations would evolve as more is understood about how firms intend to operate in the future.

A firm choosing remote working will need to be able to prove that the model, or a lack of a centralised location, does not affect its location in the UK or its ability to meet threshold conditions for the activity it is regulated for.

Firms will also have to show that remote working does not prevent the FCA receiving information about the firm, affect the FCA’s ability to oversee the firm’s functions, cause detriment to consumers, damage market integrity, increase the risk of financial crime or reduce competition.

They will also have to prove there is satisfactory planning in place to ensure business continuity. Firms will need sufficient systems and controls to support remote working, and must also consider the impact on staff and their well-being.

Budd Elizabeth

Elizabeth Budd

Partner

With remote and hybrid working becoming for many firms the new normal, firms really need to think about the long-term processes that will have to be put in place

The FCA reminded firms they should notify the regulator of any material changes to their working environment.

Firms applying to be regulated will need to meet similar expectations as existing firms, and set out how they expect to address issues such as the location of senior managers, consumer access and contact, and systems and controls.

Financial regulation expert Elizabeth Budd of Pinsent Masons, the law firm behind Out-Law, said: “With remote and hybrid working becoming for many firms the new normal, firms really need to think about the long-term processes that will have to be put in place.

“The FCA is quite clear that there should be no diminution in service or compliance as a result of people working regularly from home. However, perhaps some employers – and employees – will not have appreciated the FCA’s ability to visit any address from where services are provided and that includes residential addresses. In agreeing to long term remote and hybrid models firms need to ensure that employees are completely clear as to expectations and potential consequences,” Budd said.

Employment law expert Anne Sammon of Pinsent Masons said it was notable the FCA was thinking about the impact of remote working on staff, including well-being, training and diversity and inclusion matters. 

“The risk of adverse impact on staff in terms of well-being and diversity and inclusion is likely to be mitigated where working from home is optional – but for firms mandating such an approach, the FCA appears likely to take an interest in how they have evaluated the impact on these two important human resources aspects,” Sammon said.

The FCA said international firms should continue to have an establishment or physical presence in the UK. It added it would evaluate firms on a case-by-case basis.