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FCA Focus on Non-Financial Misconduct Amplifies Case for Comms Surveillance

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By Oliver Blower, Chief Executive Officer of VoxSmart.

Leading City compliance professionals have been bombarded with reasons to enhance their employee communications surveillance capabilities over recent months, with fresh headlines making the case on an almost daily basis. 

Recently, yet another story broke around the threat posed by insider trading, with ex-Goldman Sachs analyst Mohammed Zina jailed for 22 months after he was found guilty of nine counts of insider trading and fraud. Moreover, wrongdoers set on exploiting access to confidential information for their personal financial gain appear to be growing increasingly creative.  

Beyond insider trading, watchdogs’ ongoing investigation into instant messaging-related record-keeping failures has cost ill-prepared financial institutions billions in financial penalties over recent years – a crackdown that shows no sign of abating in 2024. If these issues weren’t convincing enough, perhaps the Financial Conduct Authority’s (FCA) latest investigation will be.  

Last month, the FCA kicked off its crackdown on so-called non-financial misconduct, including but not limited to workplace harassment. This came in response to the regulator having received nearly 200 allegations of non-financial misconduct over the previous two years, as of April 2023.  

Ultimately, the regulator is seeking to gain a clearer understanding of how financial institutions across the City approach accusations of workplace harassment. The probe will see a range of financial institutions including banks and brokers subject to a host of questions on how they deal with issues such as sexual harassment, bullying, and discrimination. The FCA requires responses to the compulsory survey to include incidents that occurred while staff were at the office and – critically – when working from home or offsite. In a letter, the watchdog said: ‘Should allegations or evidence of non-financial misconduct become known, we expect a regulated firm to take them seriously, have the internal procedures to investigate them promptly and fairly, and to take appropriate action when allegations are upheld’.  

The bit that may alarm firms that do not possess communications surveillance technology is the part around having ‘the internal procedures to investigate [incidents] promptly and fairly’. There is little use in having a formal complaint procedure in place if no record of the alleged harassment was kept by the company in the first place. 

Can such an investigation be considered fair?  

Of course, with some degree of remote working the norm in the post-pandemic world, the number of harassment allegations referring to instances that occur outside of the office is likely to be much greater than in previous decades. The bulk of these incidents will naturally occur via phone, instant messaging platforms, or video calls.  

With this in mind, it seems paramount that financial institutions in the UK and further afield have adequate technology in place to ensure employee communications are transparent, both to satisfy authorities and – most importantly – to ensure staff are as protected as possible against harassment, be it online, over the phone, or face to face. 

While voice capture and communication surveillance technology platforms are primarily concerned with ensuring regulatory compliance with financial misconduct and record-keeping rules, companies shouldn’t overlook their benefits concerning non-financial misconduct. Indeed, as financial regulators turn up the heat on workplace harassment, these peripheral advantages could prove vital to a firm’s workplace culture and reputation. 

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