2022 checklist: Are you compliance ready?

2022 checklist: Are you compliance ready?

As we go fully into the new year, we have rounded up a checklist of 11 of the most important things for businesses to look for in 2022. 

By tackling this list of potential issues, compliance teams can create their new year’s resolutions and put their organisation’s programmes on sound footing should the Financial Conduct Authority come knocking in 2022.

1. Investment Firms Prudential Regime: The FCA’s new IFPR is coming. The new regime, which came into force on January 1 2022, significantly impacts FCA-authorised investment managers, advisers and brokers who provide Mifid services. The IFPR includes new minimum requirements for capital and liquidity, governance, including the new internal capital adequacy and risk assessment, and remuneration.

Businesses also need to familiarise themselves with a revised, albeit somewhat simplified, reporting regime, most of which must be completed on a quarterly basis (first returns in April 2022). Making the changes to adhere to the new regime is not a simple undertaking – it is crucial that businesses understand that implementation and compliance cannot happen overnight

2. ESG  

UK climate disclosures and TCFD: Created to develop consistent climate-related financial risk disclosures to be used by companies, banks and investors, the Task Force on Climate-Related Financial Disclosures is an existing global voluntary framework created in 2015 by the Financial Stability Board to increase the amount of information and transparency at the business and investment level, giving investors and others the ability to assess, and price, climate-related risk and opportunities.

Rather than creating a new regulatory framework, the FCA has selected to adopt and provide flexibility around an already existing and widely accepted international framework. The hope is that this will allow businesses to better integrate the new rules with any current existing ESG frameworks they may be reporting under. 

The FCA began implementation of the TCFD recommendations on January 1 2022 for asset managers with assets under management greater than £50bn, with a publication deadline on the June 30 2023. The second phase will be effective from January 1 2023 for remaining asset managers with AUM greater than £5bn, with a publication deadline of June 30 2024. 

EU sustainable finance action plan and SFDR: We await confirmation of the Level 2 regulation now set to come into force from July 1 2022. Level 1 requirements became effective from March 2021. The uncertainty around some obligations, alongside investor pressure on many businesses to become Article 8 or Article 9 products, have left managers struggling to stay ahead as SFDR and their ESG programmes develop over time. As we enter into the new year and await final confirmation of the Level 2 requirements, businesses will need to continue to stay fluid in this ever-changing regulatory environment.

3. SMCR – Conduct rules training for staff: The importance of good culture within businesses, including a determination to stamp out misconduct and to support diversity and inclusion, continues to be a prominent topic for the UK regulator. Arrange for staff to receive training in the senior managers and certification regime conduct rules, as well as market abuse, anti-money laundering, anti-bribery, and cybersecurity.