Building the Finance Function at an FCA-Regulated Firm

Building or developing the finance function at an FCA-regulated firm is a distinctive undertaking, because the regulated firm’s finance function must do more than an unregulated business’s — it must handle the regulatory responsibilities, meet the heightened standards, and support the firm’s regulatory obligations, alongside the ordinary finance work. For a firm building or strengthening its finance function — whether a growing regulated firm scaling its finance capability, or a firm improving a finance function that has fallen short of what the regulated environment requires — getting this right is important, because the finance function is central to meeting the firm’s regulatory obligations as well as running the business. This guide addresses building the finance function at a regulated firm, for the leaders responsible for it.

This guide is written for those responsible for building or developing the finance function at an FCA-regulated firm — the firm’s leadership, its senior finance people, and those making the hiring and structuring decisions. It covers what makes the regulated firm’s finance function distinctive, the capabilities it must have, how to structure and resource it, the particular importance of the right people, and how to build a finance function that meets the regulated firm’s needs. It is a practical guide aimed at those building the finance capability of a regulated firm. The aim is an understanding of how to build a finance function that meets the distinctive demands of the regulated environment, supporting both the firm’s regulatory obligations and its business.

What Makes the Regulated Firm’s Finance Function Distinctive

The finance function at a regulated firm is distinctive because it must do more than an unregulated business’s finance function, carrying the regulatory dimension alongside the ordinary finance work. It must handle the regulatory responsibilities that fall to finance — the regulatory reporting, the regulatory capital calculation and monitoring, the client money or safeguarding where relevant, and other regulatory matters — which are additional to the ordinary finance work and require regulatory understanding. It must meet the heightened standards of accuracy and control that the regulated environment demands, because errors can have regulatory consequences. And it must support the firm’s regulatory obligations more broadly, operating within the firm’s regulatory framework.

This means the regulated firm’s finance function needs capabilities beyond those of an unregulated business’s finance function — the regulatory understanding, the ability to handle the regulatory responsibilities, the heightened rigour — alongside the core finance capabilities. Building the regulated firm’s finance function therefore requires building not just a good finance function but one equipped for the regulatory dimension, which is a more demanding undertaking. Understanding what makes the regulated firm’s finance function distinctive — the regulatory responsibilities, the heightened standards, the support of the regulatory obligations — is the foundation of building it, because it defines what the finance function must be capable of beyond the ordinary. The regulated firm’s finance function is distinctive in carrying the regulatory dimension, and building it must account for this, which is what makes it a particular undertaking.

The Capabilities the Finance Function Must Have

The finance function at a regulated firm must have a range of capabilities, combining the core finance capabilities with the regulatory ones. It must have the core finance capabilities — the technical accounting, the reporting, the controls, the analysis, the financial management — that any finance function needs, because the regulated firm needs sound finance just as any business does. On this foundation, it must have the regulatory capabilities — the understanding of the regulatory environment, the ability to handle the regulatory reporting, the regulatory capital work, the client money or safeguarding where relevant, and the other regulatory responsibilities — that the regulated environment requires.

The finance function must also have the heightened rigour and control that the regulated environment demands, embedded in how it operates, because the standards are higher and the consequences of error greater. And it must have the capacity to handle both the ordinary finance work and the additional regulatory work, which the regulatory dimension adds. Building the finance function means ensuring it has all of these capabilities — the core finance capabilities, the regulatory capabilities, the heightened rigour, the capacity — through the right people, structure, and resourcing. A firm building its finance function should identify the capabilities it needs, including the regulatory ones specific to its regulated status, and build a function that has them. Understanding the capabilities the finance function must have — core finance, regulatory, rigour, capacity — is the basis for building a function equipped for the regulated environment. The function must have both the finance and the regulatory capabilities, and building it means ensuring it has the full range the regulated firm requires.

How to Structure and Resource It

Structuring and resourcing the finance function at a regulated firm involves ensuring it has the people, the structure, and the resources to deliver both the finance and the regulatory work to the required standard. The structure should provide for the regulatory responsibilities as well as the ordinary finance work — ensuring there is capability and capacity for the regulatory reporting, the regulatory capital work, the client money or safeguarding where relevant, and the other regulatory matters, alongside the ordinary finance function — because the regulatory work must be done well and cannot be an afterthought. The structure should also provide the segregation and controls that the regulated environment, with its heightened standards, requires.

Resourcing the function means providing the people and the capacity to handle the workload, including the additional regulatory workload, to the required standard, because an under-resourced finance function may not meet the demands of the regulated environment. The firm should resource the finance function adequately for both the finance and the regulatory work, recognising that the regulatory dimension adds to the demands. The structure and resourcing should also allow the function to scale if the firm is growing, building the capability the growing regulated firm will need. A firm that structures and resources its finance function well — providing for the regulatory responsibilities, the controls, the capacity, the ability to scale — builds a function equipped for the regulated environment; one that under-structures or under-resources it leaves the function struggling to meet the demands. Understanding how to structure and resource the finance function — providing for the regulatory work, the controls, the capacity, the scaling — is part of building a function that meets the regulated firm’s needs. Sound structure and resourcing, accounting for the regulatory dimension, are the basis for a finance function equipped for the regulated environment.

The Particular Importance of the Right People

The right people are particularly important in building the finance function at a regulated firm, because the regulatory dimension requires finance people who understand and can handle it, and the wrong people can leave the function unable to meet the regulated firm’s demands. The finance function needs people with the regulatory understanding and capability the regulated environment requires — the FC or finance leader who can lead the function’s regulatory work, the finance staff who can handle the regulatory responsibilities, the capability to do the regulatory reporting, the capital work, the client money or safeguarding where relevant. Getting the right people, with the regulatory capabilities alongside the finance capabilities, is central to building a finance function that works in the regulated environment.

This makes the hiring of the finance function particularly important at a regulated firm, because the firm must hire finance people who bring, or can develop, the regulatory capabilities alongside the finance capabilities. A firm building its regulated finance function should prioritise getting the right people — those with the combination of finance and regulatory capability, or the finance capability and the aptitude to develop the regulatory dimension — because the people are what make the function capable of the regulated work. Hiring for the regulatory dimension, as well as the finance capability, is part of building the regulated firm’s finance function, and it is where specialist recruitment support that understands the regulated sector can help. Understanding the particular importance of the right people — those with the regulatory capabilities alongside the finance capabilities — is central to building the regulated firm’s finance function, because the people determine whether the function can meet the regulated environment’s demands. The right people are the key to a finance function equipped for the regulated environment, and getting them is central to building it well.

Building a Finance Function That Meets the Regulated Firm’s Needs

Building a finance function that meets the regulated firm’s needs brings together the capabilities, the structure and resourcing, and the right people, into a function equipped for the regulated environment. The firm should build a function that has the core finance capabilities and the regulatory capabilities, structured and resourced to deliver both the finance and the regulatory work to the heightened standard the regulated environment requires, staffed with the right people who bring the regulatory capabilities alongside the finance capabilities. This function, equipped for the regulated environment, can support both the firm’s regulatory obligations and its business, which is what the regulated firm needs from its finance function.

Building such a function is a deliberate undertaking, requiring the firm to understand what its regulated finance function needs, and to build the capabilities, structure, resourcing, and people to provide it. A firm that builds its finance function this way — deliberately, accounting for the regulatory dimension, with the right capabilities and people — builds a function that meets its needs as a regulated firm; one that builds only an ordinary finance function, without accounting for the regulatory dimension, builds a function that may not meet the regulated environment’s demands. For a growing regulated firm, or one strengthening its finance function, building the function well is important, because the finance function is central to the firm’s regulatory obligations and its business. Understanding how to build a finance function that meets the regulated firm’s needs — the capabilities, structure, resourcing, and people, equipped for the regulated environment — helps a firm build the finance capability it needs. Building a finance function equipped for the regulated environment is a particular undertaking, and doing it well is important for a regulated firm, which is where specialist recruitment support and a deliberate approach make the difference. This connects to the guides on hiring finance staff with the right regulatory experience and the skills that make a regulated-sector FC.

Using Interim Support to Build the Function

A regulated firm building or strengthening its finance function may benefit from interim support, and understanding this option helps a firm build its function effectively. Interim finance professionals — experienced professionals engaged on a temporary basis — can help a regulated firm build its finance function in several ways: providing experienced capability quickly while permanent arrangements are made, bringing the expertise to design and establish the regulated finance function, or filling a gap while the firm recruits the permanent team. For a regulated firm that needs to build or strengthen its finance function, interim support can provide the experienced regulated-sector capability to do so, particularly where the firm needs capability quickly or needs expertise to establish the function.

Interim support is particularly useful for building the regulated finance function because it can bring experienced regulated-sector expertise — the understanding of what a regulated finance function needs and how to build it — that the firm may not have internally. An experienced interim finance professional who has built or worked in regulated finance functions can help a firm establish the capabilities, structure, and processes its regulated finance function needs, providing the expertise to build it well. A regulated firm building its finance function should consider whether interim support could help — providing capability quickly, bringing the expertise to establish the function, or bridging to the permanent arrangements. Understanding the option of interim support to build the function helps a regulated firm build its finance capability effectively, drawing on experienced regulated-sector expertise where it helps. Interim support is a valuable option for building the regulated finance function, and a firm building or strengthening its function should consider it as part of getting the finance capability it needs.