1. Lack of governance and ownership

Senior accountability and ownership are the foundation of compliant regulatory reporting. Yet, regulators have found responsibilities to be too widely dispersed or delegated too far down from the top. This can result in little oversight over the process and a lack of accountability. So, make sure you spend time allocating clear roles and responsibilities to all involved in the process and ensure this is supported by robust processes and documentation.

2. Poor controls

Your regulatory reports need to be supported by an effective control framework. But poor controls and a lack of documentation can lead to errors and misreporting. This is often exacerbated by a high degree of manual intervention when producing reports (we’re looking at you, spreadsheets!). To avoid poor controls tripping you up, try and automate the process as much as possible and document how the new process will work and who approved it.

3. Lack of documentation

An absence of documentation will sink you if the regulator comes knocking and wants to understand why you submit your reports the way you do. Regulators expect the entire process to be clearly documented, including roles and responsibilities, interpretations relating to reporting requirements, relevant controls, and a chronology of any changes along with approvals.

4. Reliance on spreadsheets

Many Payment companies rely on spreadsheets to get reporting done. But even though spreadsheets are every finance professional’s favourite tool, they come with the risk of overwriting or becoming out of date. This puts an onus on companies who use spreadsheets to robustly document their spreadsheet’s processes and controls. To wave goodbye to this bothersome risk, we suggest using an automated reporting tool.

5. Legacy systems

Unfortunately, legacy technology systems didn’t die out with the dinosaurs. They’ve stuck around and are causing huge data management headaches for Payment companies. Things become difficult when reports are due and employees need to try to locate, extract and reconcile the data required for regulatory reporting. To make life easier, consider upgrading to a modern, purpose-built reporting system which handles data collection and reconciliation for you.

6. Lack of investment

Lack of investment in regulatory reporting has led to outdated reporting infrastructure and the need for heaps of manual intervention to populate data and plug gaps. This leads to a higher risk of human error and misreporting. Making an investment in upgrading your reporting infrastructure will reduce manual intervention, resulting in fewer errors, and will pay handsome dividends in the long term.

7. Not submitting reports on time

Not submitting your reports on time is a big no-no for the FCA and an issue they called out in their March 2023 Dear CEO letter to the Payments sector. Note, the FCA plan to “make more frequent use of our right to charge firms that fail to meet reporting deadlines… [and] ongoing failure may result in a referral to enforcement for cancellation”.

To stay in the FCA’s good books, set up reminders to ensure you submit reports on time. And more importantly, make sure the team members that you rely on to produce reports start in good time too!

8. Personnel issues

A lack of senior personnel can result in reporting standards not being met due to inexperience. Alternatively, if you have a small team or individual with high competency, this could result in over-reliance on them for reporting. To avoid this, you need to build some level of redundancy into your workforce to ensure you can always get your reporting done, or you need to find an external partner to work with you. Get your thinking cap on now.

9. Lack of appropriate sign-off

It’s important to call the issue of lack of appropriate sign-off out on its own. You need to ensure that all regulatory reports are signed off at the appropriate level and that any changes to the reporting process are subject to the same level of sign off. Otherwise, the FCA could take the view that you’re not really in control of your business and do a deeper dive across your entire business (not just your reports!)

10. Lack of periodic testing

Testing is crucial to staying compliant. Because the FCA takes a dim view of firms that misreport over a prolonged period.

Need proof that testing is worth your time?

In 2019 the FCA fined Goldman Sachs over £34 million for failing to submit accurate and timely reports over the period 2007 – 2017.

Don’t make this mistake. Ensure you regularly test, test, and test your reporting policies, controls, and procedures.