Key Compliance Responsibilities for a Head of Compliance in P2P Lending
Introduction
Welcome to Lesson 3.1: "Key Compliance Responsibilities for a Head of Compliance in P2P Lending." In this lesson, we will explore the critical roles and responsibilities of a Head of Compliance within a Peer-to-Peer (P2P) lending platform. We will cover the importance of ensuring regulatory compliance, managing risk, and fostering a culture of integrity and transparency. Additionally, we will address the specific responsibilities under the FCA's Senior Management Functions (SMF) 15 and 16, as well as the role of the Money Laundering Reporting Officer (MLRO) in AML and financial crime prevention.
Learning Objectives
- Understand the primary responsibilities of a Head of Compliance in a P2P lending platform.
- Recognise the importance of ensuring adherence to FCA regulations and other relevant legislation.
- Learn strategies for managing compliance risks and fostering a culture of compliance.
- Identify key areas of focus, including AML, GDPR, and consumer protection.
- Understand the specific responsibilities associated with SMF15 and SMF16.
- Learn the responsibilities of the MLRO in AML and financial crime prevention.
- Understand the importance of training and competency within the business.
1. Role and Responsibilities of a Head of Compliance
Overview:
The Head of Compliance plays a crucial role in ensuring that the P2P lending platform operates within the legal and regulatory framework. This involves overseeing compliance with FCA regulations, the Financial Services and Markets Act 2000 (FSMA), GDPR, and AML requirements.
Key Responsibilities:
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Regulatory Compliance:
- Ensure the platform adheres to FCA regulations, including rules outlined in the FCA Handbook (PERG, CASS, DISP, and relevant parts of COBS).
- Monitor changes in regulations and update internal policies and procedures accordingly.
- Liaise with the FCA and other regulatory bodies as necessary.
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Senior Management Functions (SMF):
- SMF15 (Compliance Oversight):
- Oversee the firm's compliance with regulatory requirements.
- Ensure that the firm's policies and procedures are effective in achieving compliance.
- Report compliance matters to the board and senior management.
- SMF16 (Compliance Monitoring):
- Establish and maintain an effective compliance monitoring program.
- Identify, assess, monitor, and report compliance risks.
- Ensure that compliance monitoring is integrated into the firm’s overall risk management framework.
- SMF15 (Compliance Oversight):
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Risk Management:
- Implement and oversee a robust risk management framework.
- Conduct regular risk assessments to identify and mitigate compliance risks.
- Develop and maintain an effective AML program, including customer due diligence (CDD) and suspicious activity reporting (SAR).
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Data Protection:
- Ensure compliance with GDPR requirements, including data security, transparency, and breach notification procedures.
- Conduct regular audits of data protection practices and update policies as needed.
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Consumer Protection:
- Ensure clear and accurate disclosure of information to business borrowers.
- Oversee the handling of borrower complaints in accordance with DISP guidelines.
- Monitor advertising and financial promotions to ensure they are not misleading.
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Internal Controls and Training:
- Develop and implement internal controls to ensure compliance with regulatory requirements.
- Provide regular training and updates to staff on compliance matters.
- Foster a culture of integrity and transparency within the organisation.
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Training and Competency:
- Develop and implement a training program to ensure that all staff understand their compliance responsibilities.
- Ensure that staff receive ongoing training to stay current with regulatory changes and compliance best practices.
- Assess and certify the competency of staff to ensure they are capable of performing their duties in compliance with regulatory requirements.