Project Objectives
The client had suffered a suspension of their regulatory licence and needed a senior and
experienced strategic board advisor to help them determine whether the business could/
should be saved, and if so, how. The board comprised less experienced individuals, with
vision and energy, but not necessarily the depth of experience that only time can provide
in terms of facing significant business challenges and solving them.
Challenges & Barriers
The specific challenge that the shareholders of the client were facing was whether the business was worth saving, and if so, whether it was capable of survival. There was a real challenge to understand the dynamics of the multiple headwinds facing the business and whether there was an opportunity (or not) to overcome the deficiencies found by the regulator, which had resulted in the suspension of their licence to trade.
The board of directors were less experienced in managing regulatory scrutiny, the business had a geographically spread operating model across continents, the governance and control infrastructure was weak, and while the quality of the underlying systems was good, the customer base was 50% focused in Eastern Europe and included higher-risk groups, and the ability to demonstrate compliance was insufficiently strong.
The client was subject to a Section 166 review from the FCA around its financial crime systems and controls, which was extended to include broader issues around governance.
Our current chairman acted as a full-time strategic board advisor for six months, which culminated in a robust plan for survival, refinancing of the business, strengthening the capital base, ensuring that they could understand what the FCA was seeking for them to do, updating various fundamental components of the business model (governance, MI, financial crime systems and controls, capital adequacy) to achieve compliance under a significant Section 166 review and be cleared to operate normally with their customer base again. The client did not have the relevant SME expertise or leadership in-house.
Solution
Our current chairman acted as a full-time strategic board advisor to the client for six months, providing that level of experience and capability to support and advise the board in determining
the most appropriate course of action, assuaging the concerns of both the shareholders and the regulator, and enabling the client to navigate that most difficult of challenges of survival rather than winding up.
The regulator became more engaged and willing to support a turnaround, despite their original position being a forced wind-down accompanied by disciplinary action against the directors. The shareholders agreed to refinance the business, and a full-scale remediation of the business was initiated. This all culminated in a robust plan for survival, refinancing of the business, strengthening the capital base, restructuring the operating model, and remediating the business deficiencies.
Our current chairman was able to provide that deep knowledge and experience for the client, with the right skills and approach needed to help them navigate that business-critical suite of
challenges.
Brighter provided leadership to support the board, programme and project managers, insight and reporting, and multiple teams across the programmes of work, across the broadest range of
financial crime requirements. This included KYC at both CDD and EDD levels, transaction monitoring, SARs, updating policies, procedures, and processes, implementing systems for all of the aforementioned (design, testing, implementation), and a full-bore remediation programme for its client base. Brighter supplied up to 60 people for around 22 months, replacing Deloitte, who had failed to make appropriate progress in their previous five-month tenure.
This was a significant project, where the founders worked very closely with the client CEO and COO to ensure that all aspects of the service were delivered effectively, on time, and within budget.
Approach
Our current chairman worked as a strategic advisor to the client’s board, working closely with the regulator and the skilled person, in an exceptionally collaborative way across the organisation and Brighter consultancy teams, to bring about a business turnaround. Our chairman moved from being a strategic advisor to the board for six months to taking on an interim CEO role for 18 months for the client.
Brighter, as part of the solution, deployed its most senior leadership team and some of its most experienced associates to provide the client with the specialist SMEs with the right knowledge, experience, and capability to support the business turnaround. Brighter worked collaboratively with the client and the skilled person to ensure that all objectives were met, reporting was clear, that the regulator was appropriately appraised of progress, and that the client could demonstrate achievement of the requirements.
Results
Quantitative
The client achieved a successful Section 166 assessment, having its licence restored by the FCA in December 2021, having deployed a robust reworking of its core business operating model, a successful remediation programme, and updated systems and controls for its financial crime requirements.
Qualitative
Brighter provided regulatory certainty for the client in its dealings with the skilled person and the FCA. The shareholders were delighted with the outcome achieved. The deployment of our chairman was a decisive factor in the regulator being able to restore the client’s operating licence.
