{"id":8949,"date":"2019-08-10T14:35:59","date_gmt":"2019-08-10T14:35:59","guid":{"rendered":"https:\/\/www.staging.legal500.com\/events\/?post_type=event_report&p=8949"},"modified":"2020-01-22T13:02:54","modified_gmt":"2020-01-22T13:02:54","slug":"enterprise-gc-2019-postcards-from-the-most-regulated","status":"publish","type":"event_report","link":"https:\/\/my.legal500.com\/events\/report\/enterprise-gc-2019-postcards-from-the-most-regulated\/","title":{"rendered":"Enterprise GC 2019: Postcards from the most regulated"},"content":{"rendered":"

Another headline panel session from our flagship corporate counsel event, Enterprise GC, saw four in-house banking lawyers reflect on the regulatory dynamics of their sector.<\/p>\n

Greg McEneny, GC of the non-ring-fenced Lloyds Bank Corporate Markets, kicked off the discussion by considering the change in skillset brought on by post-financial crisis regulation: \u2018I used to think of myself as a transactional lawyer but now I very much see myself as a regulatory lawyer.\u2019<\/p>\n

In particular, he noted the sheer pace of that change: \u2018When regulation came out ten years ago, you had a lot of time to build up to it, maybe two to five years before it was implemented. The time horizon to sort ourselves out for Libor, for example, is a year. Lloyds is a super tanker, so it\u2019s difficult to turn quickly. All of the different regulation that has come into play has improved our agility and ability to react.\u2019<\/p>\n

Hugh Pugsley, legal chief of HSBC UK, has also seen the positive effect regulation has had on his organisation. He noted that his legal team has taken on greater responsibility within the bank, especially as it struggles with the many different (and sometimes contradictory) requirements imposed by regulators. \u2018We\u2019ve developed a role as advocates for regulators. They want banks to be operationally stable but putting us through so much regulatory change can do the opposite. On one hand they want to protect customers and clients, but on the other they want to push through major structural changes. As GCs we have to navigate through those very difficult waters.\u2019<\/p>\n

Noline Matemera, TLT partner and panel moderator, suggested that the GC role had changed as a result, from giving straight advice to boards to \u2018handholding\u2019 their respective organisations. Simon Croxford, EMEA and investment bank GC for UBS, emphasised the sheer range of stakeholders the bank has to take into consideration. In the UK alone he counted five, the Competition and Markets Authority, the Payment Systems Regulator, the Prudential Regulation Authority, the Financial Conduct Authority and, \u2018increasingly\u2019, the Treasury select committee. Croxford said: \u2018They are all conflicting. Open banking totally conflicts with stability of systems and safeness and integrity of payments. There\u2019s an inherent tension there.\u2019<\/p>\n

\"postcards\"It\u2019s a very quick conversation if you go to a regulator and say you\u2019re going to prioritise someone else\u2019s piece of work.
\nHugh Pugsley, HSBC<\/strong><\/p>\n

McEneny supported this assessment, and reflected on the change in advice he has given over the years: \u2018There\u2019s such a drive for transparency and good conduct. It\u2019s not about legal rights, it\u2019s about how we\u2019ll look if we exercise those rights. You\u2019re having to handle two things: driving the business with good, enforceable legal positions, but also having to recognise the environment you\u2019re in and advising the business on a range of possible solutions to the problem.\u2019<\/p>\n

Dean Nash, chief legal officer of online bank Monzo, reported that the diversity of stakeholders was a particular issue in his high-growth start-up. He said: \u2018It\u2019s about three main things: competition, consumer protection and financial stability. We hit the objectives on competition and consumer protection. Financial stability, less so. We\u2019re a start-up, we\u2019re inherently unstable. It leads to diametrically opposed conversations between the Treasury and the Bank of England. Legally navigating those nuanced discussions is quite interesting.\u2019<\/p>\n

A prominent topic of discussion was the Senior Managers Regime (SMR), regulation aimed at increasing the personal accountability of senior individuals in the financial services industry. Of particular interest was recent news that the FCA is considering exempting heads of legal from the SMR.<\/p>\n

Nash observed: \u2018You could hear the whoops from Chancery Lane. I\u2019m unfortunately already in the SMR. I\u2019ve had to tell the general counsel we\u2019ve just hired, who reports into me, not to come to me for advice. I don\u2019t want to give it, because I\u2019m bound by SMR. I refuse to give privileged advice.\u2019<\/p>\n

The panel also considered the \u2018crystal ball\u2019 problem the SMR would potentially pose, as the regulation states you must disclose anything that a regulator may reasonably expect.<\/p>\n

As Matemera concluded by asking the panel on how to prioritise the differing interests of the diverse group of regulators, Pugsley quipped: \u2018It\u2019s a very quick conversation if you go to a regulator and say you\u2019re going to prioritise someone else\u2019s piece of work.\u2019 He argued that financial services institutions should be lobbying the regulators more to have \u2018some sort of industry air traffic control system\u2019 in place, working with government or public affairs about what the key priorities are for the sector.<\/p>\n

He added that a deluge of regulation is harmful: \u2018I worry about the amount of effort and work large organisations put in. How can smaller banks comply with all this different regulation?\u2019<\/p>\n

\"postcards\"We would be delighted if there was no regulation because then our better offering, we hope, would really stand out.
\nDean Nash, Monzo<\/strong><\/p>\n

Nash argued that forcing conventional banks into innovative compliance is stifling competition. \u2018We would be delighted if there was no regulation forcing people to improve their offering because then our better offering, we hope, would really stand out. We find ourselves saying: \u201cThat was our USP, but now Barclays are doing it because they have to!\u201d\u2019<\/p>\n

One key aspect to engaging with the regulators, noted Croxford, was empathy with their position, especially after they have been repeatedly asked what they were doing in the lead-up to 2008 in monitoring the banks. As a result, they have had to get tougher and they have had to impose more regulation. Nash agreed, adding what is easy to forget when talking about the regulator is there are individuals on the other side of the fence who have their own stresses, pressures, bosses and so on. \u2018We have had to get to grips with that quite quickly and now we try to approach our regulator engagement from a position of empathy.\u2019<\/p>\n

The discussion then turned to operational resilience, which Nash noted is Monzo\u2019s number one priority in terms of engagement with the regulator, particularly as a new bank: \u2018They are looking at this Cloud-based bank, thinking: \u201cWhat level of assurance do we have that you are not just going to fall over overnight?\u201d. There is a huge role for a legal team and the GCs to play. It might be unique to an organisation like ours which is very tech driven. The key is to translate a lot of that stuff around operational resilience from the tech folk into things that the board and the regulators will understand.\u2019<\/p>\n

Tom Baker<\/strong><\/em><\/p>\n

\n

Panel<\/h2>\n
    \n
  • Simon Croxford, EMEA and investment bank general counsel, UBS<\/li>\n
  • Noline Matemera, partner, TLT (moderator)<\/li>\n
  • Greg McEneny, general counsel, Lloyds Bank Corporate Markets<\/li>\n
  • Dean Nash, chief legal officer, Monzo<\/li>\n
  • Hugh Pugsley, general counsel, UK, HSBC<\/li>\n<\/ul>\n<\/div>\n","protected":false},"featured_media":8950,"template":"","class_list":["post-8949","event_report","type-event_report","status-publish","has-post-thumbnail","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/event_report\/8949","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/event_report"}],"about":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/types\/event_report"}],"version-history":[{"count":0,"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/event_report\/8949\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/media\/8950"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/events\/wp-json\/wp\/v2\/media?parent=8949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}