Prepare to Police Bankers at Home for Longer, Says U.K. FCA

(Bloomberg) -- Banks need to rethink the way they supervise staff and protect their culture now that many employees are staying home for the long haul, according to a senior British regulator.

“A lot of the controls, the informal oversight, the informal cultural practices you put in place are built on pre-existing relationships,” said Megan Butler, director of supervision at the Financial Conduct Authority. “The longer working from home goes on, the more they are at risk of breaking down.”

Butler said firms have adapted well to home working following pandemic-related lockdowns, but businesses will face fresh challenges such as trusting new staff to adopt practices that they’ve only seen remotely.

“If we’re in this now for a much longer time than I suspect many firms were planning, how do they need to rethink some of those broader oversight and cultural norms that they’ve been reliant upon in the past?” Butler said at a press conference after the watchdog’s annual meeting.

Many U.K. financial firms this week paused or reversed plans to bring staff back into the office after the government tightened rules to slow the resurgence of Covid-19. Outside of the U.K., plans to return to the office are continuing. Barclays Plc plans to increase numbers in its New York office next month, Financial News reported Thursday.

Failure Wave

The FCA is closely supervising financial companies in danger of going bust in the after-effects of the pandemic, Butler said. About 14,000 have responded to a survey on their ability to survive the crisis.

“Bottom line is, firms fail. They always fail, they always have failed. Our concern is that they can fail in as orderly fashion as possible,” she said.

“What we’re asking firms to do, and to assess themselves against, is a plausible but severe scenario. That is leading to hundreds of firms being considered in that first wave. We expect that number to get larger.”

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