Following the Rules

Special episode: Clausematch’s Evgeny Likoded and LawtechUK’s Aleksandra Wawrzyszczuk discuss a new tool that could fundamentally reshape the way regulators and companies navigate changes to rules

Today’s episode is a special one produced in association with Clausematch, a regulatory technology company providing financial services companies in the UK, US and Asia with solutions to address challenges within policy management and regulatory change.
Today’s guests call on financial services regulators globally and the companies they supervise to work together now to automate the processes around changing and implementing rules.
They also explain how a first-of-its-kind project that they’ve been working on could not only help to kick start an industry drive to digitalise regulatory change, but also fundamentally reshape compliance processes and resourcing at financial services companies at a time when regulatory change programmes are  is only getting more complex time.
Evgeny Likhoded is CEO and founder of Clausematch. Aleksandra Wawrzyszczuk is head of LawTechUK, a government-funded programme driving innovation in the UK’s legal sector. 

Financial Conduct Authority’s COO Emily Shepperd on preparing the regulator for its expanding remit, and the need for a “bit more understanding” about the FCA’s limits

Today’s guest outlines how the UK’s markets watchdog is adapting the way it works and resources its teams to ensure it is fit to meet its ever-expanding remit.
She calls on City workers to be “a bit more understanding” about the Financial Conduct Authority’s limits as it navigates this growing to-do list, to speak out if the regulator is “getting something very, very wrong” and for finance bosses to speak up if they want to find a way for their employees to help the FCA with its workload.
She also discusses what changes the FCA wants to see amongst the financial services companies and individuals it supervises and the cultural red flags that the watchdog is “most sensitive to”.
Emily Shepperd worked as director of customer services and change at pensions group Aegon UK, and as chief operating officer for Europe, the Middle East and Africa at Bank of New York Mellon before joining the FCA in early 2021. Since then, she has led the FCA’s authorisations division, which the regulator describes as “the gateway” for firms and individuals aiming to work in finance. In 2022, she added the role of FCA COO to her remit and took on responsibility for future-proofing the regulator via its transformation agenda.

Special episode: Smarsh’s Goutam Nadella maps out how finance firms can best modernise their approach to tracking staff communications during a tough economy and beyond

Today’s episode is a special one produced in association with Smarsh, a US-headquartered technology firm providing global financial services companies with the tools to capture, store, and monitor their communications.
Today’s guest outlines why it’s imperative that regulators and the financial services firms they supervise work together now to determine industry best practice for modernising compliance. He also explains how it’s possible for City firms to continue to prioritise innovation in their back office in today’s tough economic environment. And he details the common mistakes finance bosses must avoid when seeking to more closely track their employees’ mobile communications amidst a widespread regulatory clamp down on firms’ use of monitoring encrypted messaging apps like WhatsApp. 
Goutam Nadella oversees technological innovation and commercial strategy as Chief Product Officer at Smarsh.
 

Convicted Libor rigger Tom Hayes on his plans for the future and what the City should learn from his case

Today’s guest  was the first person in the world to be jailed for rigging the London interbank offered rate a benchmark that helped to determine interest rates or mortgages in sizeable corporate loans.
He is also one of the only bankers to be sent to prison after the financial crisis.
Tom Hayes is a former UBS and Citigroup trader who spent half of his 11-year sentence in prison. His release in early 2021 came after the four other former traders convicted in the Libor manipulation scandal had completed their prison terms. Eight others embroiled in the scandal were acquitted without charge.
He had unwittingly made it easy for prosecutors to earmark him for harsher treatment by first cooperating with the UK's serious fraud office, providing them with hours of incriminating interviews before switching tack and deciding to fight his case. The UK's criminal courts did not look kindly upon that move.
In 2017, lawyers for Hayes submitted this case to the Criminal Cases Review Commission, which is an independent body responsible for investigating suspected miscarriages of justice in a bid to have his conviction quashed. His legal team have long claimed that his autism diagnosis ahead of his 2015 trial was not given due consideration in court and has argued that the prosecution used witnesses who were not experts and held back important items of evidence from the defense.
The CCRC has had the option to refer Tom's your case to the court of Appeal if it decides there's a real possibility that his original conviction could be quashed by the court. In late 2021, it decided to provisionally reject his efforts to appeal his case.
Hayes and his legal team have since had the opportunity to push back on that decision and that pushback has become more pronounced last year when a US Court dismissed its criminal indictment against Tom.
In November, the CCRC took the unusual step of inviting Hayes’ legal team to give their views on whether the US Court decision should prompt his conviction to be overturned, which suggests it is reconsidering its earlier position and that Hayes’ six year long fight to clear his name now looks set to be nearing an end.
We discuss his ongoing efforts to clear his names, how he is moving on both personally and professionally from a lost decade, and what today’s finance execs can learn from his story.
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In response to Hayes' comments in this episode, a CCRC spokesperson said:  "This is a large, complex case and no final decision has yet been made by the CCRC on whether to refer it to the Court of Appeal.  However, a CCRC committee is scheduled to meet on 13 March 2023, to discuss and assess the case further.” 
A spokesperson for the SFO said that the prosecution agency's investigations into interest rate rigging had "followed the criminal justice process in England and Wales". "As a result of the investigations, nine individuals either pleaded guilty or were found guilty by a jury,” the spokesperson said. "A number of those convictions have been reviewed by the Court of Appeal and none of them have been overturned."
 

Rutherford’s Jonathan Skerrett on where finance’s compliance talent should look for new jobs and pay rises in 2023, and the mistakes bosses make when hiring in a tough job market

Today’s guest outlines where in the financial services sector compliance professionals will be able to find new jobs and salary increases in the coming months, and where we can expect a slowdown in recruitment. He details the common mistake finance bosses make when hiring and promoting back-office expertise and how to avoid them. And he explains why – and how – financial services execs must act now to help close the gender pay gap in compliance. 
Jonathan Skerrett is the founder and director at Rutherford, a recruitment firm that specialises in placing compliance officers in roles within the financial services sector. 

Latham & Watkins’ Nicola Higgs and Credit Suisse’s Simon Welch outline how finance firms can best respond to fast-changing ESG rules and what bosses should do now to prep for greenwashing allegations

Today’s guests set out how financial services firms should best respond to the now myriad and rapidly-changing environmental, social and governance requirements in existence worldwide and the steps they should take now to prepare for formal or informal challenges to their ESG credentials. They outline the role of legal and compliance staff as well as front office executives in such responses and the common mistakes such individuals should avoid. They also discuss the ESG-related challenges that they believe not enough people are paying attention to.
Nicola Higgs advises banks, fund managers and insurers on UK and European financial services regulatory matters as a partner in law firm Latham & Watkins’ London office and global co-chair of the firm's financial institutions industry group.
Simon Welch oversees banking group Credit Suisse’s legal response to sustainability-related matters as its head of legal for sustainability.
 
***EPISODE NOTES***
During the episode, we discuss five ESG-related questions that boards governing financial institutions should ask themselves. These are listed below.
Which aspects of the sustainable finance agenda are relevant to your firm and how do you track, monitor and adapt your corporate strategy in response to this?
Do you have the right collective expertise within your executive team to understand the risks and opportunities the ESG transition poses for the business?
Who are the key stakeholders involved in the delivery of the ESG transition strategy? Is there a clear understanding as to where responsibility sits within the 3 lines of defence? What are the necessary information flows between these stakeholders?
What steps have you taken to ensure that your clients and external stakeholders have a clear understanding of your ESG strategy?
What action have you taken to ensure that staff have a consistent understanding of your ESG strategy in the context of your wider corporate purpose?

Coinbase’s Tom Duff Gordon on responding to the collapse of FTX exchange, how the UK can best build a competitive crypto hub and the regulatory questions arising from a move to decentralised finance

Today’s guest explains what he believes the right regulatory response to the collapse of crypto exchange FTX would be. He details the policies UK lawmakers and regulators should consider as they seek to more closely police all things crypto while also establishing the City’s as a competitive finance hub post-Brexit. And he outlines what EU policymakers got right and where he believes they went wrong in their regulation of the sector.
Tom Duff Gordon’s 20-year career includes 5.5 years overseeing banking group Credit Suisse’s government relations and regulatory policy in the EU and UK. Since June, he has led crypto exchange Coinbase’s approach to regulatory change outside of the US as its vice president for international policy.

Financial Reporting Council’s Kate O’Neill on the case for speeding up the creation of the FRC’s replacement, and how to avoid over-complicating ESG requirements

Today’s guest urges UK lawmakers to create a replacement body to the audit, actuarial and accounting watchdog the Financial Reporting Council “as fast as possible”, almost four years after such a move was first recommended.
She lays out the case for the UK government to prioritise better, simpler rule-making over more regulation when looking to reform the UK’s financial services rulebook post-Brexit.
She outlines how boards and investors should best approach increasingly-complicated environmental, social and governance regulation, and offers tips on how to avoid common mistakes when addressing ESG reporting requirements.
Kate O’Neill is a former lawyer whose 30-year career includes stints as director of European funds and hedge funds at asset manager Janus Henderson Investors and managing director for investor relations at Lloyds Banking Group. Since 2020, she has overseen the creation of the FRC’s Stakeholder Engagement and Corporate Affairs function.

OBIE’s Charlotte Crosswell on moving the UK’s open banking initiative forward and her priorities as the first chair of the UK’s new Centre for Finance, Innovation and Technology

Today’s guest outlines how she believes UK lawmakers and regulators can best retain and grow a competitive fintech hub both in a tough economic period and the City’s new post-Brexit era. She details the achievements of the UK’s approach to open banking, and offers advice on how to move this initiative forward. 
These are ideas we should see feed through into action because Charlotte Crosswell is not only completing her mandate as chair and trustee of the Open Banking Implementation Entity, but has recently been appointed as the chair of the Government's new Centre for Finance, Innovation and Technology. Her 26-year career also includes roles as CEO of lobby group Innovate Finance, and president of exchange Nasdaq.

Fund industry veteran Philip Warland on the network of City spies that UK regulators must turn to now and why it’s ”constitutionally wrong” for watchdogs to oppose government call-in powers

Today’s guest calls out UK finance regulators for their vocal opposition to proposed new government powers that would see lawmakers able to call watchdogs in to explain aspects of their approach to policing the City, arguing that such a stance is both “self delusion” and “constitutionally wrong”.
He calls on the UK’s Financial Conduct Authority to stop seeing City executives as “a bunch of criminals” and do more to engage with financial services professionals. He explains why he believes that reinstating City intelligence gatherers known as ‘grey panthers’ and establishing a proper secondment process at the FCA would ultimately help the watchdog better understand and police the sector.
He also outlines how parliament should best analyse the impact of changes to UK rules post-Brexit, and plenty more in between.
Philip Warland’s views have been crystallised over a 50-year career in financial services, which includes stints at the UK central bank the Bank of England, and banking group Standard Chartered. His last full-time role was at fund manager Fidelity International where he spent seven years leading its government affairs division as its head of public policy until 2017. He now advises several companies on regulatory matters but is speaking to Following the Rules in a personal capacity.