Investigating a workplace allegation that could become a regulatory issue
A grievance involving bullying, harassment or other inappropriate behaviour may look, at first, like a familiar HR issue. In financial services, however, there may be another layer to consider.
The same allegations can raise regulatory questions, with potentially serious consequences for both the individuals involved and the firm. For HR teams, recognising when an investigation may have a regulatory dimension, and doing so early, is therefore increasingly important.
In episode 2 of Workwise: Navigating workplace investigations, Joe Beeston and Danielle Crawford are joined by Brian McDonnell, founding partner of McDonnell Ellis, a specialist financial services law firm, to look at the practical challenges of running workplace investigations in a regulated environment.
When does an HR issue become a regulatory issue? And why does it matter?
The FCA’s changed approach to non-financial misconduct means that allegations about an individual’s behaviour that were previously treated purely as HR issues may now also raise questions about a potential breach of the Conduct Rules and/or about an individual’s ongoing fitness and propriety to perform their role.
A regulatory dimension can significantly raise the stakes of an investigation.
For the individual, an adverse finding could have consequences beyond the immediate employment relationship. It may affect regulatory assessments and references and, ultimately, their ability to work in a regulated role in the future.
There may also be wider issues for the firm. Serious misconduct can expose weaknesses in systems and controls or raise questions about workplace culture and how managers have responded to concerns.
This is particularly relevant where managers knew, or should have known, about an issue. An investigation may therefore need to look beyond the original allegation and consider what others knew, what action was taken and whether more should have been done.
So what does that mean for HR professionals and investigators faced with issues that raise overlapping concerns?
Investigating issues with a regulatory dimension
For HR teams, perhaps the most important practical point is to recognise when an issue has moved beyond the usual employment sphere, as it will impact who needs to be involved, how an investigation is designed and managed and what follow-up is required.
Regulatory considerations should not be bolted onto an employment investigation at the end.
If there is a regulatory dimension, HR teams must involve Compliance colleagues from the outset to ensure that the investigation is set on the right tracks to support robust regulatory decision-making.
Regulatory issues will also inform how the investigations are scoped, and Compliance colleagues can provide valuable input. Getting the scoping right ensures that the investigation gathers the information needed to answer both the employment and regulatory questions that may follow and inform robust and consistent decision-making about both employment and regulatory follow-up.
Listen to the full discussion
These are just some of the issues explored in episode 2 of Workwise: Navigating workplace investigations. Joe Beeston, Danielle Crawford and Brian McDonnell discuss the practical realities of investigations in financial services, the changing landscape around non-financial misconduct and what this means for HR teams dealing with difficult workplace issues.
Listen to episode 2: Workplace investigations in financial services.
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