The Financial Conduct Authority (FCA) has issued new guidance to companies operating a remote or hybrid working model.

The guidance acknowledges that many regulated firms have changed the location of their central operations or increased remote working away from them as a result of the pandemic, and that many plan to carry on with a hybrid way of serving their customers.

The FCA is concerned however that some firms may potentially not be able to meet their compliance demands as a result.

The new directive states that firms will be evaluated on a case-by-case basis and should be able to prove that the lack of a centralised location or remote working does not affect their ability to meet the threshold for the regulated activities they have or will have permission for.

The guidance states that companies should be careful to ensure that remote working does not affect the ability of the firm to oversee its functions, cause detriment to consumers, damage the integrity of the market, increase financial crime or reduce competition.

Recommendations include firms making sure they have the right systems and controls in place, including the necessary IT functionality, and that these systems are robust.

Additionally, firms should ensure they have considered any data security risks, particularly as staff may transport confidential material more frequently in a hybrid arrangement.

Companies are also warned to consider how key functions will be performed and overseen, being advised to manage systems and controls effectively, including the ability to fully access records and systems securely.

Responding to the guidance, Sridhar Iyengar, managing director at online working vendor Zoho Europe, said: “The FCA is right to warn financial services firms about the risks associated with hybrid working, particularly around challenges such as regulatory requirements, data compliance and accountability.

“The pandemic has forced through many positive changes in terms of working practices, yet far too many companies still lack the training and assessment of personnel and the IT infrastructure and systems to ensure complete compliance.”

Tim Sadler, CEO of security firm Tessian, added, “A hybrid working model brings with it huge benefits in terms of employee well-being, cost savings and flexibility, but also substantial cyber risks.

“As well as ensuring the right security systems are in place it’s essential that staff are fully trained about data security risks, including incorrectly addressed email correspondence and external threats like phishing emails and ransomware attacks.”

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