Thousands of city staff are in danger of prison and heavy fines

New Wide Learning Survey shows
* 11 per cent are unaware that they are covered by FSA
* 28 per cent are unsure of regulatory duties
* 23 per cent don’t know who is their Money Laundering Reporting Officer
* 37 per cent have never been trained or have received very little training on compliance
* 26 per cent feel that the FSA has made little difference to the running of the market

As new Anti-Money Laundering legislation comes into force, the latest 2004 Wide Learning Survey of Financial Services Compliance Training reveals that, as a result of lack of knowledge through inadequate training, thousands of staff covered by the Financial Services Authority are unknowingly at risk of prison sentences and their employers of heavy fines by breaching laws controlling their work.

The survey of 200 City staff working in positions and organisations covered by the FSA was first carried out in 2002. Key findings in the February 2004 survey include
* 11 per cent still do not know they are under the jurisdiction of the Financial Services Authority, although this is an improvement from 33% two years ago.
* 28 per cent are unsure of their regulatory duties, even as the market starts its fourth year under FSA control. This is matched by the survey showing that 27% do not feel they have had enough compliance training.
* 23 per cent, including 13 per cent of managers, do not know who is their Money Laundering Reporting Officer. While this is better than 34 per cent in 2002, many staff are in danger of breaching reporting procedure rules. An accountant received six months in prison for this offence.
* Overall, 21 per cent have never received any compliance training, a slight improvement on 29 per cent who had not been trained in 2002. However, with a further 16 per cent currently having received very little compliance education, an alarming total of 37 per cent have had little or no training, leaving companies hugely exposed to penalties from the FSA. Even in key areas such as Anti-Money Laundering and the Financial Services and Markets Act, where 11 per cent and 43 per cent respectively have not been trained.

* Of those who have been trained on compliance, 18 per cent have not received any training in the last two years and 37 per cent have never had any refresher courses. This figures reflects a wide difference between senior management and main office staff. While 24 per cent of management had not received refresher training, 45 per cent of office staff had not. Allowing that retention is unlikely to last this long, this suggests that even many of those who have been trained may also increasingly be at risk of breaching regulations.
* The status of the FSA is improving but still showing scope for improvement. In 2002 39 per cent felt that the FSA had little real impact on the running of the market. Now 63 per cent believe that it is effective but 26 per cent still feel it has made little difference. However, 38 per cent of senior managers currently feel the impact of the FSA has been slight.

Steve Dineen, Chief Executive of Wide Learning says: Considering the number of companies suffering heavy fines and even an individual receiving a prison sentence, also allowing for the increasing status of the FSA, it is very surprising that so many staff still cannot answer these key questions and have not yet been trained. We were certainly expecting a greater improvement over the last two years.

The lack of refresher and continual training is also a concern. If staff are out of date, the authority and security of the market will be undermined and, with it, customer confidence.

The survey also revealed major changes in the way staff are trained. The use of e-learning for compliance training has risen enormously in two years, from 21 per cent in 2002 to 61 per cent this year, and 87 per cent of these found e-learning effective.

The vast increase in the use and effectiveness of e-learning highlights how the quality of training delivered by this means and the way it is introduced and managed within organisations, has improved dramatically during this time. It is understandable as e-learning, whether off-the shelf or bespoke, fits the needs of the financial services market. It enables companies to train staff quickly, consistently and cost-effectively, and to track their progress and prove learning to the FSA, while making it easy to update course content. Meanwhile it allows individuals to be trained whenever necessary and when and wherever suits them -just in time - and to learn and refresh their knowledge at their own pace.

It seems to be easy to breach the regulations unwittingly and the FSA is acting powerfully with little flexibility. Senior management, compliance managers and training teams should be reassessing who they have trained and whether some people need to be updated. With high quality e-learning readily available, it is in the interests of organisations to ensure that all staff are trained and up to date in their knowledge and understanding of the legislation.

The Wide Learning 2004 Survey was carried out in February 2004. A total of 200 face-to-face interviews were carried out with staff in roles covered by the FSA working in the City of London. 32 per cent were in managerial level positions. 38% work in investment banking, 20% in retail banking, 18% in fund/asset management, 10% in insurance or pensions, others in law, accountancy, IFAs etc.