Maximising Your Performance When Meeting the Regulator; for You and Your Firm

(and how to manage that stress like a pro)


Written by Guest Contributor, Daniel Lawlor

Ex Regulator, Funds Lawyer and Managing Director of Aquest.ie


There are a number of scenarios where you will need to meet with the Regulator.


Sometimes, it is a ‘tea and biscuits’-type meeting where you get to meet and greet with the Regulator in a relaxed and open atmosphere. This happens, for example, when you are deciding on which jurisdiction to establish in and are meeting various Regulators as part of the selection process.


However, most meetings with the Regulator form part of a serious supervisory engagement and bring with them a level of tension (there should always be a healthy tension between the Regulator and its regulated firms) and stress. These meetings could be in the context of an application for authorisation, a fitness and probity interview, a thematic review or part of the Regulator’s programme of scheduled supervisory engagements with the firm. Whatever the specific context, your best chance of achieving the optimal outcome for you and your firm is to be fully prepared for the meeting. And conducting a thorough, cold-sweat inducing mock interview is perhaps the most important part of your preparation.


Your mock interview can be conducted in-house, with a third party, or in front of a camera - but keep in mind, the closer that you can replicate the actual experience, the better it will be for you to (i) achieve the outcome you want and (ii) build a healthy relationship with the Regulator.




An interview with the Regulator that goes pear shaped has ramifications for both you and your firm such as:


1. If you are meeting the Regulator as part of your application for authorisation, a poor meeting will raise a flag with the Regulator that you are ill prepared for the authorisation process and, by extension, not ready to act as a regulated firm. You only get one chance to make a first impression, as they say, and once this flag has been raised, you can expect your authorisation process to be lengthier and costlier than it might otherwise have been. And the successful conclusion of the process (i.e. getting authorised) is not guaranteed.


2. Regulators assign risk ratings to regulated firms and use different minimum supervisory engagement models depending on the risk rating assigned. But remember these are ‘minimum’ engagement models - the Regulator’s supervisory teams always have the option to increase the frequency of their engagement with a firm (by holding more meetings, for example). And this is exactly what they will do if you perform poorly in the meeting and create a doubt in the Regulator’s mind regarding how well your firm is being run. In that instance, the Regulator will want to keep a closer eye on you.


3. Ultimately, meetings with the Regulator are about building trust - the Regulator wants to look into the whites of your eyes and be assured that you know what you are doing and running your firm properly and in the best interests of your customers. If you cannot convince the Regulator of that, you are setting your firm up for a difficult relationship with the Regulator where every ask you have will be challenged by the Regulator as it will need constant convincing and reassurance by you.



The Regulator is meeting you because they…


1. Want to see if your business case for seeking authorisation stacks up, whether you have the resources and commitment to build a firm that can cope with the mountain of regulation it will be subject to and whether you are serious about undertaking an authorisation process;


2. Are trying to identify standard industry practice and are looking for consistency answers, narratives and approaches across a number of firms;


3. Have identified one or more risks within your firm and they want to understand how you are monitoring, managing and mitigating these before they issue you with a Risk Mitigation Programme.





Your preparation begins with your correspondence with the Regulator


1. The Regulator will ask you to submit a range of documents and/or prepare a presentation in advance of the meeting. This correspondence will form the basis for your meeting with the Regulator.


2. You, and whoever is helping you prepare for your meeting, needs to critically review the documentation from a Regulator’s perspective. And by ‘critically review’ we do not mean looking at the positives - we mean look for the gaps, the inconsistencies and the risks in your firm because this is exactly what the Regulator will be doing.


3. Having identified these weaknesses, you then need to understand what your firm is doing to address them.


You and your meeting prep. team will want to prepare a set of quality, tough questions you can expect to be asked by the Regulator. You will want to include questions pertaining to the focus of the meeting based on your document review. You should also cover broader matters that are topical in the industry. These could be things like: board meeting performance, culture, diversity, constructive challenge and the last challenge you had with the board and how it was addressed.


When we help firms prepare for meetings with the Regulator, our document review will typically throw up 8 to 10 pages of relevant questions that the interviewee might be asked. So anything less than 7 pages (typed, single spaced) isn’t really good enough.





Finally, don’t let the stress of meeting the Regulator trip you up.



Human Behaviour Specialist, Shannon Eastman (She is also a fellow here at Crypto Curry Club) has facilitated, in partnership with Aquest.ie, dozens of individuals and regulated financial services firms meeting the Regulator over the years.


Her guide to maintaining a clear head and delivering thoughtful answers follows for you to use in your own preparations when meeting the Regulator.



Let’s start with the bottom line - you have a distinct state that you show up in when you’re calm, comfortable and conversing on subjects that feel good. In contrast, you have a distinct presence that appears when you’re feeling; stress, discomfort and a sense of being unprepared for an important situation.

When you are sitting in front of the Regulator’s supervisory team (watching your every move), they will easily observe if you present as ‘Calm and Thoughtful’ or ‘ ‘Anxious and Agitated’.


While how you present will most likely be as a result of how well you handle stressful situations, the supervisory team will come to their own conclusions. So it is in your best interests to learn to manage stress like a pro.


3 things to know to manage stress like a pro


​1. Be aware of the simple version of the science: when your 5 senses perceive stress (most of which occurs outside of conscious awareness), your body responds by releasing stress hormones that animate your physical being in ways that are (mostly) unconscious to you. Your brain registers the discomfort after the body experiences stress. So, concealing discomfort is more difficult to implement.


2. Your words and your body language will either support each other, or contradict each other. If someone knows what they are looking for, you will be hard pressed to conceal the conflict.


3. The two states you will likely show up in during that interview - for the purpose of preparing to meet the Regulator, we’ll focus on just two obvious states that show up during these situations.


State one: when you’re calm, your pitch, tone, speed of speaking and choice of words will present accordingly. Your body will be relaxed, you will make eye contact, you will appear confident.


State two: when you’re anxious, your pitch, tone, speed of speaking and choice of words will sharply contrast. Your eyes will do all sorts, but not necessarily make natural eye contact, so you will appear agitated. This is less rocket science, and far more about being attentive to those you are interacting with.


The body tells its own story, regardless of what you say




These are a few of the everyday tells we come across during our Mock Interviews with individuals and firms about to meet the Regulator.


Consider this your cheat sheet.


The Eyes


When your eyes move to the right you are accessing your creative center, what you’re telling us is being created right there in real time.


When your eyes move to the left, you are accessing your memories. What you are telling us is from a memory you are currently recalling.


Throat


Dry mouth, itchy throat, hard swallows - all signs of discomfort in the body.

Clear, considered speaking with a body posture that reinforces our sense of confidence in what we are saying.


Voice


Tone, Pitch, Speed of speaking will have a distinct set of characteristics when you know you're bluffing, making things up, or unprepared for the question.


Tone, Pitch, Speed of speaking will have a distinct set of characteristics when you are well prepared and know the answer.


Deflection


This happens a lot in our Mock Interview experiences; a question is asked, and the answer provided is a deflection to side step the answer.


Over Sharing


Usually an over sharing moment will accompany a deflection, When you don’t want to answer a pointed question, sometimes we over share for the purpose of covering up the fact that the original question wasn’t answered.


Another common moment that triggers an over share is silence.


Deliberate silences are used in conversations as most people feel unnerved by silence, and as such, fill the need to fill it with content they wouldn’t necessarily reveal to the Regulator.


Distancing Language


When we do this with words, it tends to be swapping a familiar term with a formal term that distances you from the subject matte. “I did not have sexual relations with that woman.”

“Do you have a good working relationship with John Smith, your CEO?

“I have a very good professional relationship with the CEO!


Distancing Language and The Body


Do you have a good working relationship with John Smith, your CEO?” Both hands fold in front of the chest, body leans back in the chair - and the answer is - “Yes I have a very good professional relationship with the CEO’!”


The arms folded in front of you, and the body moving back away from the person posing the question, are unconsciously done to protect you from a question you are not happy about.”


An obvious moment where the body and the words are in conflict with each other.


Mouth


Tight lips - the upper and lower lip firmly pressed against each other typically appears when what you have just said, isn’t in fact what you believe in. Bottom lip goes up tends to appear after a statement you have no confidence in. Relaxed and natural smile that is reflected in the eyes, demonstrate an intrinsic choreography between your words and body. The body appears relaxed in posture, dropped shoulders, relaxed breathing.


Hands


Fidgeting, touching their neck, touching the face, the back of the head, or when your hands are not following the same beat and pattern of your words. There is a conflict between what you and your body are communicating. All signs of anxiety in the body.

Relaxed hands or purposeful hands (eg, taking notes during a meeting) suggest calm and focussed participation in a situationBody Putting something between you and the person talking to you unconsciously protects you and makes you feels safer during that moment of feeling ‘exposed’. Rocking, or knee bouncing is mostly an unconscious response from the body to process a sensation of stress or anxiety. All language that likely conflicts with the words being used in that moment.


Meeting the Regulator anytime soon?




The easy wins for you to have in place to manage your stress, include:

  1. Bring water and sip it regularly as prevention for dry throat and hard swallows.

  2. Keep your hands in your lap, or if appropriate, take notes.

  3. Prepare a set of answers to use for the questions you don’t know. Here’s three good ones for you to take and make your own:

  4. Great questions - would it be ok if I consulted my colleagues later today and forwarded that answer via email? (Write your action down so you remember to follow through)

  5. I don’t have those details to hand, would I be able to share my answer to that after this meeting by email? (Write your action down so you remember to follow through)

  6. I don’t know - but I can find out. Shall I include that answer in the email I am sending over to your after this meeting? (write your action down so you remember to follow through)

  7. Do at least 1 mock interview as part of your preparation.

  8. Have your colleagues mimic the experience for an authentic mock interview- have at least 2 of your colleagues take the role of Regulator if this is a simple meeting. Have 4 colleagues comprise the Regulator’s supervisory team if this is a more serious meeting.

  9. Have your colleagues prepare a set of questions based on the correspondence you received from the Regulator and the documents the Regulator have asked for. Aquest typically prepares 8 to 10 typed, single spaced pages of questions when we are invited in to perform the Mock Interview with you. So anything less than 7 pages (typeed, single spaced) isn’t really good enough.

  10. For every question you stumble over, take the next day to go and sufficiently prepare.



 


Aquest.ie Regulatory Resources for Regulated Firms

Danel Lawlor is an Ex-Regulator, Funds Lawyer and Managing Director of Aquest.ie

daniel.lawlor@aquest.ie


ShannonEastman.com Growth Matters for Business Owners & Professionals

Shannon Eastman is a Growth Advisor, Human Behaviour Specialist, Communications Expert and Influence Architect

shannon@shannoneastman.com Telegram +353 861 422688


Together, they offer authentic Mock Interviews for financial services firms meeting the Regulator. Contact Daniel Lawlor for more details.


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