Conduct Risk with Deloitte

What does a good conduct risk framework look like?
In the light of the recent TP ICAP £15 million fine , and forthcoming SM&CR, firms need to be more aware than ever of good conduct risk.

The FCA recently fined TP ICAP £15.4m for ‘wash trades’ and failing to co-operate with the investigation which uncovered close relationships between brokers and their clients that included extravagant entertaining.  TP ICAP had “ineffective controls around broker conduct” between 2008 and 2010, resulting in “improper” trades, the FCA found.   The FCA found brokers’ bonuses were directly linked to how much business they generated, while the firm paid for overseas trips to entertain as well as dinners and drinks in the City.  The FCA said this risked improper conduct because brokers and clients (traders) could “act together to generate unwarranted brokerage for in return for enhanced entertainment or other favours”.  One example given included TP ICAP clients being offered more expensive trips in exchange for improving the price on trades to avoid losses at Tullet Prebon’s overseas offices.

Using the TP ICAP fine as a case study, Paul Fraser from Deloitte will talk through exactly what good conduct risk framework looks like and where TP ICAP went wrong.