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Capturing Communications isn’t Compliance – RegTech and the Path to a Simpler Day Job

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Capturing Communications isn’t Compliance – RegTech and the Path to a Simpler Day Job

By:  Eran NoamVice President Global Sales and Business Development at Shield FC

It is six months since the Markets in Financial Instruments Directive (Mifid II) came in to force and two months since the General Data Protection Regulation (GDPR), which means you are probably feeling the effect of regulation exhaustion.

It is undoubtedly a long and tiring road to get to a stage where you can say, with confidence, that the organisation is compliant with these landmark pieces of European regulation.

Now is the time to look at how you, as a Compliance Officer, can make life simpler for yourself when it comes to satisfying your internal and external stakeholders. You may be surprised to know that Mifid II has the potential to make the day job just a little bit easier.

As Compliance Officers led the charge in readying their organisations for Mifid II, there was a strong onus placed on ensuring voice recording (this was already standard for the vast majority of financial institutions) and electronic communications could be captured, indexed and archived for the required five-year period. However, as you are well aware, Mifid II is about far more than storing communications and being able to retrieve it upon request. There is a clearly defined expectation within the regulation that organisations must be proactive in the detection and deterrence of market abuse and possess the ability to reconstruct communications for investigative purposes and demonstrate Best Execution.

Eran Noam

Eran Noam

Capturing cross-channel communications

This can present a major challenge with just one communication channel, but today in our work and private lives we take an omni-channel approach to interactions and transactions. A communication thread linked to a trade may start on SMS or instant messenger app, switch to a land-line or turret call, then voicemail on a mobile phone and be followed-up with a chain of emails. What’s more, it may involve more than two parties. It is a world away from a time not so long ago when everything would have been done via the turret.

In our eyes moving from one channel to another is seamless and natural way of communicating, in the eyes of the Financial Conduct Authority (FCA) it should be easy to makes these accessible to them should they request it, but for organisations that store data in siloes in disparate format it isn’t so simple.

Research conducted by TeleWare in late February 2018 (after Mifid II came in to force in January) found that… “40% of firms are risking non-compliance with Article 16 of MiFID II.” This despite the huge publicity in the financial industry media that surrounded the former Investment Banker, Christopher Niehaus, being fined £37,198 by the FCA in March of last year, for using WhatsApp to share confidential client information.

RegTech is good news for Compliance Officers

The truth and good news for Compliance Officers is that despite the perceived roadblocks of siloed data held in different formats etc, it can be a very straightforward procedure to reconstruct cross-channel interactions, well within the 72-hour deadline that the regulator typically sets.

The challenge for the Compliance Officer is that not all RegTech solutions are made equal, yet all purport to offer the same return-on-investment – to deliver compliance. RegTech is a relatively new buzzword, as are the myriad of the technologies that fall under its umbrella. Enterprise Ireland has recently published a report entitled ‘Regtech: Beyond Compliance – How are companies using regtech to meet growing regulatory demands in financial services?’ and its author, Frost & Sullivan’s ICT Senior Analyst, Deepali Sathe is quoted saying: “RegTech solutions are agile, secure and automated, thus simplifying the adherence procedures. These solutions can be integrated with existing systems and complement the current compliance teams. The impact is visible with better compliance, reduced costs and enhanced decision-making.”

However, be careful in your selection! Some do not cate for ‘all’ electronic communications (a prerequisite for Mifid II) whilst others can be unsympathetic to the plight of large financial institutions that have invested heavily in and continue to use tried, tested and trusted legacy systems. As such the deployment and use of some of these all singing and all dancing systems can be slow and cumbersome, as the organisation finds itself at the solutions ‘my way or the highway’ model.

So, how do you know how to make the right choice?

The one question to ask of a RegTech solution

Look for a system that is agnostic to the numerous different data formats that are in use within the organisation today but may also be present in the future. And ask this simple question…

Will the system enable me to quickly create a definitive, accurately time-stamped reconstruction of an entire interaction, irrespective of the channels used, which I can easily use for internal investigation and submit to the regulator to meet their requirements?”

However, it is important to stress that such a capability should not be purely viewed as a compliance cost, as the benefits can be much farther reaching. As important as it is to safeguard the organisation again the fines that can be levied by the FCA (which are just as eyewatering as the headline grabbing sums the ICO can apply), the value of being able to detect instances of intentional and unintentional malpractice, that could cause financial harm and reputational damage to the business, has a substantial benefit to safeguarding the future prosperity of the entire organisation.

As with any regulation you can view it as a time consuming and expensive resource drain or take the positive that it nurtures accountability and transparency, not only with the regulator, but also ensuring and evidencing best execution to the wider organisation and its customers. What’s more, there are anecdotal reports circulating that the right RegTech solution can result in efficiency gains of at least 30% through automating and streamlining key aspects of the compliance process. Now imagine what you could do with that extra day each week!

www.shieldf.com

Business

Can your company data make you famous?

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Can your company data make you famous? 1

By Kerry Gould, Associate Director, Speed Communications

Businesses gather and generate reams of data every day on everything from purchasing habits to customer behaviour. But too often, it gets ignored or restricted to ‘internal use’. Is this a big opportunity missed?

Perhaps more than in any other sector, finance and banking companies hold a goldmine of data. Of course, individual customer transactions are highly sensitive and need to be kept secure. But when these are collated into trends across an entire customer base, it can paint a compelling picture of people’s changing priorities. What are people spending money on? How are they using credit cards differently? Are they shifting their savings goals or looking at mortgages differently? And it’s not just consumer-facing businesses that can use their data to tell stories. It’s a growing area in the world of B2B marketing, especially for firms targeting the UK’s 5 million+ SMEs.

Insight in the COVID-19 era

Appetite to share data is increasing since the start of the COVID-19 pandemic, too. We’re already seeing companies step up and share this intelligence; barely a day goes by when there’s not a report on how people are changing and adapting. In an era when everyone is trying to be a ‘thought leader’, having this unique insight can really set a company apart and elevate its public profile.

There are some great examples out there. Barclaycard revealed in its SME Barometer that the number of small businesses actively taking payments has increased by 24 per cent since the start of lockdown, an indicator of recovery. Meanwhile, Bottomline revealed in its Business Payments Barometer that 89% of firms continued to pay its suppliers late and £164,000 was lost by the average mid-sized business to payment fraud.

These reports achieved media coverage in print and online, and likely to have been shared widely over social networks, been promoted in email newsletters, discussed in online webinars and provided talking points in customer meetings. In today’s multi-channel world, there are a plethora of ways to reach customers (and potential customers) and we know that a ‘layered approach’ to these communications stand the best chance of getting you noticed and remembered.

Commissioning a survey through an independent research agency is a tried and tested method for marketing and PR teams to gather insight to use for content marketing and news generation. But often, your company’s own proprietary data can be even more compelling. It’s based on actual facts and behaviours, immune from the public’s continually fluctuating opinions. Plus, it doesn’t cost you thousands of pounds to commission. If your company has a strong enough dataset that can tell a story or indicate a trend, it should absolutely be used.

Overcoming hurdles

Like all well-meaning initiatives, data-led PR doesn’t come without its challenges. Here, we tackle three.

  1. Getting buy in to go public
Kerry Gould

Kerry Gould

Sometimes, business stakeholders can be nervous about releasing data that may be deemed commercially sensitive, revealing market share or insight that competitors could take advantage of. In this case, it’s about considering risk versus reward. The marketing benefit for making yourself known could be offset by competitive intelligence that your rivals may have through other sources anyway. Ultimately, there’s often a compromise to be stuck and there may be some data that you can’t disclose. Bringing stakeholders on the journey with you from the start is often the best way to ascertain this.

  1. Organising reams of data

It can be overwhelming to organise complex data sets, gather trends from different silos, departments and platforms. Many finance companies have in-house data analysts and insight teams whose job this is, but for others, outsourcing to a specialist provider like Data Cubed or Beyond Analysis can be a helpful move. By building a dashboard that collates everything in one place, teams from across the business, and external PR or marketing agencies, can get access in real time.

  1. Not having enough data

It may be that your business doesn’t generate reams of data or lacks a large enough sample size of customers. In this case, you can partner with an organisation that does. In the Jobs Recovery Tracker developed with the Recruitment and Employment Confederation, we partnered with EMSI to tap into their database of live job vacancies. This helped to track the employment market amid COVID-19, generating masses of media coverage, insight to inform its content marketing and talking points for its upcoming REC 2020 conference.  This can sometimes be treated as a commercial arrangement but often considered a joint PR opportunity that’s win-win.

Data journalism is a growing discipline in the world of media, with news outlets dedicating talented people and resources to telling stories with numbers. The BBC and Guardian do it particularly well. With marketeers – particularly in data-rich industries like finance – waking up to the power it can hold for true thought leadership, the future is likely to be one ever more governed by data-led insight. How long before ‘data-PR’ becomes a discipline in its own right?

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Business

Advice for contractors closing down their contracting company

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Advice for contractors closing down their contracting company 2

By John Bell is Director of insolvency firm Clarke Bell, which he founded in 1994.

Contractors with a limited company/Personal Service Company (PSC) have been going through more than their fair share of turbulent times recently.

In the last two years contractors/PSCs have been bracing themselves for the impact that the new off-payroll legislation (IR35) will have on their lives and livelihoods, as the Government ploughed ahead with its plans to roll out the reforms to the private sector; as it, wrongly in many cases, believed some contractors should be deemed as employees and not genuine self-employed contractors.  Then came Covid-19 and once again those self-employed workers were dealt another blow as the pandemic left many without work overnight, albeit there was some relief as Off-Payroll was paused until April 2021.   And let’s not forget Brexit and all the uncertainty around it which is having a huge effect on a lot of businesses in the UK.

It has been a bumpy ride for businesses of all sizes over the last few months and, despite the emergency measures announced by the Chancellor in an effort to keep the economy afloat, not every contractor will want to carry on trading. Some will want to retire earlier than they’d previously planned – to get away from all the turmoil and ‘cash in’ all their hard earnings. Others, however, will have seen their income falling to such an extent that they are now having cash flow problems and are unable to pay some of their bills.   Some may be considering taking up a PAYE role for job security whilst others may be forced to put their retirement plans on hold and continue working until they feel confident that their pension pot will serve them well.

The combined effects of Brexit, Covid-19 and the new Off-Payroll tax have hit businesses hard and some company directors now think that closing down their company is the best course of action for them.

A Members’ Voluntary Liquidation is the best option for contractors

If a contractor is planning on moving into an employee/PAYE role, retiring or pursuing some other life or career plan then a Members’ Voluntary Liquidation (MVL) is likely to be the most tax-efficient way to close a solvent company – particularly if the assets of a company are more than £25,000.

An MVL is an HMRC-approved process and a licensed insolvency practitioner must be appointed. While it may have a negative-sounding ring to it – with terms like ‘liquidation’ and ‘insolvency practitioner’ – there is nothing negative about it. Quite the opposite, in fact. By placing a company into an MVL it is a clear illustration that someone has been running a successful company.

An MVL allows a contractor to draw any remaining profit as a dividend, paying income tax on the dividend amount.  With the help of the licensed insolvency practitioner who will liquidate a company, the reserves can then be distributed as capital, which are then subject to capital gains tax (CGT) at either 18% or 28%.

Through an MVL, a contractor can also take advantage of Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief before 6 April 2020.  If someone qualifies for this relief, this can mean that CGT will be paid at a rate of 10% on qualifying assets, which can translate into considerable tax savings.  Each shareholder of the limited company could also benefit from a tax-free allowance of £11,000, the Annual Exempt Amount.  If there are multiple shareholders, this can be highly efficient.

To ascertain eligibility for Business Asset Disposal Relief / Entrepreneur’s Relief, contractors should speak to an accountant and also look at the Gov.uk website.

Off-Payroll (IR35), Brexit and Covid-19 are all things that are likely to have a huge impact on contractors and their limited companies and most firms of Insolvency Practitioners will offer free and confidential advice.

My advice to contractors is to talk to their accountant and help decide whether an informal strike-off or an MVL is the best option.  If a contractor is having serious cashflow problems then an insolvent liquidation might be the best option.

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How we as female entrepreneurs can inspire and educate the next generation of female leaders

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How we as female entrepreneurs can inspire and educate the next generation of female leaders 3

By Vaishali Shah, serial entrepreneur at Creativeid

There is tremendous enthusiasm and aspiration amongst the next generation of women who are passionate about being successful in their chosen career, whether it’s running their own business or rising to the top in the company they choose to work in. It is up to those of us who are already in the shoes they want to fill to be the role models and help them along the way. They need our support and guidance and access to tools and resources.

The Alison Rose Review of Female Entrepreneurship found that only 39% of women felt they had the capabilities to start a business compared to 55% of men because they did not fully believe in their entrepreneurial skills. The Review also found that only 30% of women said they already knew an entrepreneur compared to 38% of men.

Here are some ideas and suggestions of how those of us who are successful women in business can help and support the next generation of leaders:

Mentoring – connecting the leaders of the future with experienced and established entrepreneurs and leaders in their industry who know the steps and have already overcome the challenges. Meeting on a regular basis (in person or via video technology), answering questions, offering resources and helping them to define their vision clearly while pointing out opportunities would be extremely beneficial.

Female only networks – most events, especially in the financial and banking sector, are attended by a majority of men. This can be a bit daunting for women who tend to feel isolated. Unfortunately, there are very few female-only business networking groups. We need many more. Women have a different networking style than men. A female only network can give members a safe place to network, build confidence and relationships, while sharing some of the challenges they are facing and ask for guidance and support.

Panel discussions – invite successful female entrepreneurs and leaders from different industries to share their journeys to success. Their challenges, how they overcame them, what kept them going and any nuggets that could inspire the leaders-in-waiting. This could be run around International Women’s Day in March, for example.

Vaishali Shah

Vaishali Shah

Workshops/seminars – offer a seminar or workshop on topics that give valuable information on various aspects of running a business for entrepreneurs. In the workplace, have a system in place for ongoing training, development and engagement. Providing support, tools and resources will help to develop female talent. Make the workshops free or low cost so there is no barrier to entry. Help them to formulate a clear vision and a strong ‘why’ for their vision. This vision and ‘why’ will carry them through the tough times and be an important reminder and motivation to stay the course.

Recommendations – emphasise the importance and benefit of continual learning. Suggest podcasts, webinars or books to listen to or read. Being open to others’ experiences and ideas will help to educate and inspire them. People who achieve great success have a thirst for knowledge and are eager to learn from others.

Confidence and encouragement – give the next generation of leaders a sense of their own value and the value they bring to their market by the products and services they offer. They fill a need – they bring value. Help them understand that setbacks are a part of any business, but they should not be considered failures, rather, as gaining experience. Using setbacks as stepping stones towards their goal is what differentiates those who achieve great success from those who let setbacks define who they are, thus diminishing their chances of success.

Time for them – running or working in a fast-paced business can be all consuming, demanding and overwhelming at times, especially if they’re ambitious and want to get ahead. Teach women in business the importance of taking time out for themselves every day and to celebrate even the smallest success. Taking time out may seem counter intuitive, however it gives the mind time to relax and be open to inspiration and creativity and therefore being more productive.

Dame Karren Brady says – “If you have passion, drive and an entrepreneurial spirit, being female shouldn’t prevent you from getting where you want to be, and sometimes we must have the determination not to let it”.

Whether the next generation of female leaders are students about to embark on their business career, already running their own business or those in employment, we who have the experience and knowledge can play a crucial role in their climbing the ladder of success.

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