Dear CEO: A letter from the PRA (Prudential Regulation Authority)

Sanjay Chandwani our consultant managing the role

Not something someone wants to see coming from the PRA (Prudential Regulation Authority), however, this is the letter that went out to the CEOs of banking institutions in the UK recently.

In essence, whilst it wasn’t targeting specific banks, it was more of a general piece to inform banks that the PRA are investing pretty heavily on technology, meaning that they plan to make it easier to look at data at a more granular level. In the future this could mean that they rely less on submissions and more on their own teams to analyse and interpret the true status of the banks’ liquidity and capital positions.

Some organisations took this with a pinch of salt, while others have used it as a catalyst to recruit – and we’ve definitely seen an increase in recruitment within regulatory reporting. Organisations are pulling the trigger to recruit as a way to safeguard themselves against potential PRA action, particularly if the business is understaffed, or could do with an extra experienced head to ensure there are adequate controls and processes in place.

Let’s take a look back to 2019?

The last couple of years saw the market tighten, in particular to lower remuneration packages being offered to candidates compared to 2015 and 2016. Since the introduction of CoRep, the only other change was PRA110, but rather than paying over-the-odds salaries for specialists, the implementation was largely done taken in house.

At the start of the year we saw an over-supply of contractors in the market, the majority working in narrow roles, for example only on RWA. With organisations looking for accountants that could complete the full suite of returns, contractors subsequently found themselves out of the market for a while, being asked to lower their rates, and clients not proceeding and wanting to hold out. Those in permanent roles were in a better position, however in some cases there wasn’t enough of a salary increase to warrant a move, creating a situation where roles were being advertised for a long time, and clients were then forced to compromise on what they sought from the beginning. 

What should your recruitment strategy be for 2020?

In the summer of 2018 we predicted that regulatory accountants with skills like VBA and SQL (and now Python) would become even more valuable in future for both organisations and talent. Even though the RegTech market is dominated by the likes of Vermeg (formerly Lombard Risk), Axiom, Wolters Kluwer and K-Helix, a lot of organisations we work with are still heavily reliant on Excel and producing these returns manually. We feel our predictions are coming true, with regulatory accountants who have excellent working knowledge of SQL/VBA/Python will soon find themselves in a stronger position (irrespective of their qualifications), as they are able to automate and streamline the whole process for producing and submitting regulatory returns.

Where the PRA will apply pressure on banks to reduce their reliance on Excel, bringing in these candidates can better bridge the gap between the RegTech products and their in-house systems.  They can potentially safeguard the Bank from being a served S.166. We also cannot ignore the value of recruiting newly qualified ACAs from the Top 6 firms, as they understand the importance of controls and processes, and we know that’s what the PRA will also look at.

Candidates with the full breadth of experience producing and submitting the full suite of CoRep returns are already in short supply, so the question is, do you continue to hang around for that perfect candidate to do a BAU role or do you accept that the landscape is changing and you’ll need to start future-proofing yourselves from potential PRA action?

For more about our current roles, visit our jobs page.
27/02/20
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Will IR35 affect your business?

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Employees in the United Kingdom can be categorised as full-time, part-time, casual, freelance and contract workers, with the self-employed bracket now making up 15% of the entire working population. The number of self-employed workers jumped from 3.3 million in 2001 to 4.8 million in 2017, with a corresponding fall in the unemployment rate showing the overall boost in jobs growth from the rise in self-employment. However, the attractive market for freelancers and contractors has been hit with some uncertainty in recent times, thanks largely to the 2018 Autumn Budget’s announcement of IR35 tax reforms. Here’s what the new IR35 rules could mean for you and your business: What is IR35? IR35 is a piece of legislation originally introduced to the UK in 1999. Its purpose is to differentiate between those workers who operate as genuine contractors and those who work as ‘disguised’ employees to avoid paying tax. It came about to challenge contractors who were taking advantage of the tax efficiencies of working through a limited company, with the aim of defending both the Exchequer from lost taxes and protecting workers’ rights from unscrupulous employees. However, the IR35 has proven to be ambiguous for many, with some contractors taking advantage of loopholes and a lack of clarity. Hence, the new IR35 rules aim to tighten up the contractor market and ensure tax avoidance loopholes are closed. How does IR35 work? There are three principles that can help to determine employment status and whether a contractor falls inside or outside IR35: Control (the degree of control the client has over the work a contractor does and how and when they do it) Substitution (whether the worker needs to do the work themselves or if they could send a substitute in their place) Mutuality of obligation (whether the employer is obliged to offer work and the contractor is obliged to accept it). Additionally, the contract type, provision of equipment and whether a worker is “part and parcel” of a business can all help to determine whether someone falls inside or outside IR35. The change in IR35 rules shifts the responsibility to determine tax status away from the contractor and onto the business that takes them on. Until now, contractors have been able to self-determine their status, however as of April 2020, when the new rules come into effect for the private sector, companies will risk being fined if they don’t make the correct assessment.  How will IR35 impact contract workers? It’s anticipated that many contract workers who have been enjoying the tax benefits of working outside IR35 will fall under the legislation when employers are tasked with determining their status. This will see more contractors having tax and National Insurance contributions deducted from their pay. However, if you operate as a legitimate small business and are determined to work outside of IR35, you will not be affected by the rule changes. How will IR35 impact employers? The major change for businesses is that they will now be responsible for determining the IR35 status of any contractor working for the company. The new rules will only apply to medium and large sized businesses, so contractors who work for small businesses can continue to set their own IR35 statuses. Those businesses that the IR35 rule changes do apply to will face paying back taxes and fines should they be found to be noncompliant. What should I do to prepare for IR35? Contractors may wish to speak to an accountant or personal finance expert to determine whether IR35 will impact them and if a move to permanent work may prove to be more beneficial after the rules come into effect. For many, contracting will remain appealing regardless of increased tax responsibilities, however it’s important to factor in any change in income that IR35 may bring about. Businesses are being warned not to make blanket assessments that cover all their contractors, as this can leave workers without a fair assessment and risk them paying unnecessary taxes without equivalent employment rights. Instead, businesses should consider IR35 status on a case-by-case basis or they may risk losing out on top talent. The HMRC has released a consultation document for businesses to prepare for the IR35 changes, recommending identifying and reviewing current contract workforce status and putting processes in place for taking on new workers. At Marks Sattin, we pride ourselves on keeping abreast of all industry legislation, updates and changes that affect our candidates and clients. Speak with us about how we can help you. References: https://www.bbc.co.uk/news/business-44887623 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2018-02-07 https://www.contractorcalculator.co.uk/what_is_ir35.aspx https://www.axa.co.uk/business-insurance/business-guardian-angel/how-ir35-changes-will-affect-freelancers-and-self-employed-contractors/ https://www.telegraph.co.uk/business/ir35-rules/new-contractor-tax/ https://www.telegraph.co.uk/business/ir35-rules/how-will-new-rules-impact-business/ HMRC consultation document

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‘The only constant is change’ has never rang more true and there is no facet of business that has not been changed dramatically by this year’s global events. It is not about adjusting to any ‘new normal’, it’s about making sure you can adapt adequately to this new, more rapid pace of change'. During May 2020, we produced a survey for our contacts to understand how their business was reacting to the pandemic and to gauge overall market sentiment. We received over 130 responses to key questions relating to their thoughts, reactions and predictions regarding the unprecedented level of change we are experiencing. Although market conditions are changing daily, the ease of lock down has brought a wave of positivity as we look to rebuild on the disruption of the past few months. With this in mind, the below report outlines some of the findings from our research, and our predictions for the future. Covid-19 survey

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The only constant is change’ has never rang more true and there is no facet of business that has not been changed dramatically by this year’s global events. It is not about adjusting to any ‘new normal’

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The business case for a robust diversity and inclusion strategy in your organisation
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The past few months – and indeed, years – have demonstrated just how important diversity and inclusion are in modern society. Through the #MeToo and Black Lives Matter movements, a light has been shone on the inequality and injustice that persists, not just in our day to day lives, but also in the workplace. We can no longer ignore how important diversity and inclusion are to businesses, nor can we expect things to get better without actively working to improve conditions and outcomes for everyone. And while promoting diversity and inclusion is absolutely the right thing to do for employees, there are also business benefits to doing so.  What is diversity and inclusion? Diversity and inclusion aren’t just a priority for HR departments – it should be a key business strategy for all organisations. Workplace diversity can be defined as the understanding, acceptance and promotion of differences between people. This includes those of different genders, races, ages, sexual orientations, disabilities and religions, as well as people who have different educational, socioeconomic and experiential backgrounds. Meanwhile, inclusion is about creating a supportive and respectful work environment that values collaboration and participation of all employees, helping everyone to feel included. Together, diversity and inclusion make companies more welcoming, accessible and harmonious for everyone, not to mention more profitable and competitive. Why is diversity and inclusion important? First and foremost, diversity and inclusion are essential to make workplaces better for everyone. Purely from a compassionate perspective, it’s the right thing for employers to create environments where people feel comfortable to be themselves and can succeed without limitation. Commercially, diversity and inclusion have a significant number of benefits. Firstly, a strong focus on D&I can significantly widen the candidate talent pool , giving you access to more candidates who may be excluded by non-diverse hiring strategies. With 70% of job seekers looking for a company’s commitment to diversity when applying for new roles, it’s clear that you may be missing out on top talent if you neglect to address D&I in your organisation.  On top of that, diverse organisations have better business results, higher employee satisfaction and are more innovative, according to Business in the Community . McKinsey research shows that executive teams in the top quartile for gender diversity were 25% more likely to have above-average profitability than those companies who perform poorly in terms of executive-level gender diversity. This figure jumps to 36% when analysing teams with ethnic diversity. Diverse teams have also been proven to be more innovative, solve problems faster and have more engaged employees.  Small steps to move the dial on D&I in your organisation The current emphasis on working from home presents a key opportunity for employers to rethink their D&I hiring strategies, with current conditions potentially opening up more flexible, part-time opportunities for those who may not have otherwise been able to commit to a 9-5 office job. To welcome more working parents and caregivers, disabled people and those with neurodiversity requirements, consider whether vacancies could be flexible, remote working or on part-time hours. Now is the perfect time to rethink your workspace and how it can be made more accessible to more people.  A dedicated diversity and inclusion policy, taskforce or officer can help to highlight its importance within your business. You could perform a D&I audit, examining the levels of diversity that exist within the company and specifically at the executive level, and set goals to achieve a more balanced, inclusive environment within a certain time period. Have open conversations with your team members about D&I and ask them what would make them – and new team members – feel more welcomed. It’s also important to acknowledge the diversity that already exists in your company, such as by celebrating different cultural and religious events, greeting bilingual employees in their mother tongue or inviting families into work.  Finally, while diversity and inclusion should be championed at the very highest levels of your business, it’s crucial that every single team member feels safe to contribute to these discussions and voice their opinions and stories. Prepare to tackle some difficult topics and be questioned. While subjects like the gender pay gap, lack of executive-level diversity and opportunities for progression can feel difficult to address, they are important conversations that need to be had in the process of making real change.  Marks Sattin can help to diversify your talent pool. By partnering with a specialist recruitment agency which has a strong focus on diversity and inclusion , you’ll benefit from having access to more candidates and guidance on how to actively recruit from diverse talent pools. At Marks Sattin, we can help you identify, attract and retain exceptional people across financial services, technology, change management and more.  Contact us here to have a chat about how we can work together.  Content composed with the free online HTML editor toolkit. Please subscribe for a membership to stop adding links to the edited documents.

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The past few months – and indeed, years – have demonstrated just how important diversity and inclusion are in modern society.

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