“Root Causes” for JFSC regulatory failure
- The JFSC expects boards and senior management of supervised persons to consider the findings and content of public statements against their arrangements to ensure compliance with all relevant statutory and regulatory requirements.
- With the JFSC in mind, you should consider, as a minimum, the following notes [Lutea “Root Causes” for JFSC regulatory failure] from the public statements issued on Lutea’s [December 21ST, 2022] and two of its directors [Hodge and Hicks] in December 22ND 2023.
Lutea “Root Causes” for JFSC regulatory failure
- The following JFSC regulatory failure “Root Cause” statements are taken from the JFSC Public statement issued on December 21ST, 2022, on Lutea Holdings Limited and Lutea Trustees Limited. [links below]
- These root cause failures led to the addition of public statements [22 Dec 2023] against Ms Nicola Marguerite Hodge (Ms Hodge) and Mr Andrew Mark Hicks (Mr Hicks) [links below]
JFSC regulatory failure “Root cause” statements
- The Factors contributing to the JFSC’s conclusion include the following issues identified by the investigation:
- The Lutea Board needed more diversity in its composition skills.
- The Lutea Board needed a better understanding of requirements and best practices in governance, risk, and compliance matters.
- The Lutea Board should have adequately considered potential conflicts, independence issues or cultural barriers at the Lutea Board level.
- New appointments to the Lutea Board were typically internal appointments and/or accepting their first board position and had little impact on improving the diversity of skill sets.
- New Lutea Board members received no formal induction on appointment, lacked personal development plans and needed to be provided with training to meet their development needs.
- Lutea Board members had significant customer-facing responsibilities and worked in silos within the business.
- Lutea’s culture was customer-led.
- The Lutea Board should have prioritised risk and compliance matters and needed more cohesive and collective responsibility from the Lutea Board in this regard.
- The Lutea Board considered compliance matters to be the ultimate responsibility of its compliance function.
- The Lutea Board should have recognised compliance reporting as needing to be more adequate to enable it to exercise appropriate oversight of compliance matters.
- The JFSC has concluded that the root cause of Lutea’s regulatory and compliance failures was:-
- The ineffective operation of the Lutea Board,
- A lack of awareness of regulatory requirements and
- An organisational culture without due regard for compliance.
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