Most financial products are regulated by the Financial Conduct Authority (FCA) or the Securities and Exchange Commission (SEC), which create sets of regulatory frameworks to which businesses must conform. Someone who is new to working in a regulated environment should be aware that it is different from working in other industries due to the strict procedures in place to protect consumers.
Whether you are considering working in loans, finance, insurance, or savings, here is what to expect from working for a regulated company:
What Is Considered ‘Regulated Activity’?
The main regulators are the FCA in the UK and the SEC in the US. These regulators propose laws and regulations to monitor financial services including personal loans, mortgages, business finance, consumer loans, and more. Regulations can cover everything from interest charges to late fees and repayments, and they are put in place to ensure fair trading in the industry and the protection of consumers.
Some financial services industries are not regulated, including funeral plans, invoice finance, peer-to-peer loans, some types of business finance, and property finance. These sectors are free from regulation because approval is not always subject to status (e.g., it does not involve credit checks), they involve people lending to each other (e.g., peer-to-peer loans), and more risk falls on the provider with respect to whether the individual or company will repay a loan. Some of the most well-known unregulated lenders include Magnet Capital, MT Finance, and Funding Invoice.
When an employee starts working with a regulated company, they will always be trained on compliance, as the risk of noncompliance can result in investigations, fines, penalties, and even closure. Compliance training often covers how to speak to customers, how to present products, and how to store data.
Data protection, anti-money laundering, and treating customers fairly are common themes in new employee training at regulated companies. Typically, the company will have a full-time staff member whose role is to conduct training sessions, and new employees are often required to complete a formal exam to prove they are fit to carry out regulated activity.
Regulated companies must be transparent in their dealings. If they are providing loans or insurance products, they need to state their terms and conditions very clearly on their websites and in any documents and agreements sent out. Warning labels and representative examples are usually key requirements for regulated activity. (See examples on Payday Bad Credit).
It is important that every staff member upholds these values of transparency and promotes them in everything they do, including speaking to customers over the phone, creating marketing material, and even sending emails.
Correspondence With Customers
Any interactions with customers by phone, letter, or email must be communicated in a compliant way. On a typical phone call, you will need to ask security questions such as date of birth and mother’s maiden name, and you will usually need to answer customers’ questions according to a script that has been approved by a compliance manager. You will not be allowed to get angry or show frustration, since you are only allowed to refer to your script and your training.
The proper handling of data is essential for any regulated firm to ensure that customer information is held safely and does not get into the wrong hands. Regulated companies will typically have databases and management software to store customer data and protect it from external hacks.
Daniel Tannenbaum is a marketing consultant at Tudor Lodge Consultants.
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