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“We are disappointed with the disclosure results with only 52.9% of sampled cases providing acceptable disclosure …….. further work is required by the sector”
The FCA stated in their report on “Suitability” in May that “We are disappointed with the disclosure results with only 52.9% of sampled cases providing acceptable disclosure and further work is required by the sector to improve the initial disclosure (includes firm’s costs and services).”
Having met with the FCA Supervision Team (authors of the report) recently we have a good handle on what they mean and what they hoped to see already in place.
Additionally there was also a great deal of discussion around the suitability letter construction and what content should be included.
Regarding the Senior Managers & Certification Regime, (https://www.fca.org.uk/firms/senior-managers-certification-regime/solo-regulated-firms) we have already worked on this for banking groups and know what is involved, the final tweaks are awaited but
In the details released on 26th July 2017, the FCA said the requirements will include “responsibilities maps, handover procedures, and will need to make sure that there is a senior manager responsible for every area of their firm”.
This means that your procedures need to be identified, mapped and recorded with owners and relevant controls.
What We Are Offering
To Help You Ensure You Are Comfortable With Your Compliance Affairs, We Have Two Offers;
5 Days Work for the price of 4
If you have a piece of work that needs doing, we will arrange to provide 5 days service either at your work site or from a distance (typically report writing etc) at a 20% Discount if at least 5 days work is booked.
What Does This Mean?
This means simply whereby we would normally charge in the range of £650 to £850 for a days’ consultancy work, over a week that would be £3,250 to £4,250 – with our offer that is reduced to £2,600 to £3,400 and no VAT!
As An Extra
We Operate A “Benchmarking Audit” and that is on special offer until 4th August from £2,600 discounted to £2,080 with no VAT!
We can offer these discount ONLY FOR WORK BOOKED IN BY
5.00pm 4th AUGUST 2017
CLICK HERE to register your interest and get a copy of our
“Suitability Guide” absolutely Free!
We list some companies that may be worth trying below, but have no connection with them or receive any benefit from them at all.
We wish you the very best of luck with your future!
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Are Firm’s Managing Complaints Efficiently And Learning The Lessons From ALL Complaints, Not Just Cherry Picking The Juicy Ones To Report?
The changes made to the FCA’s complaint handling rules in June 2016 are well documented.
The rules are designed to benefit customers by “ensuring that complaints are handled quicker, efficiently and transparently”. Firms do not need to try to resolve complaints on the same day in order to avoid reporting or sending the customer an FRL. Consequently, more time and greater consideration can be given to each individual complaint and the circumstances of the complainant. This should also support a more flexible operating model and relieve some operational triage and case management strains.
Firms lose the ability to resolve complaints without reporting them; nevertheless, where all complaints are logged and reported, firms should have access to management information (MI) that better shows their complaint population, and therefore root cause analysis (RCA) should certainly be more robust- revealing a more accurate understanding of the firm’s performance.
Presumably, there are positives for clients and the sector, but how are firms managing the changes?
WHAT HAVE BEEN THE PRACTICAL IMPLICATIONS FOR FIRMS?
Theoretically, where the firm is positive that complaints, which were being closed by the next business day, were identified and resolved fairly (and in-line with regulatory expectations), then the shifting to the new rules should be more straightforward. In this instance, the biggest change for the complaint handling department is logging the complaint correctly, and issuing an SRC to the consumer. This, however, still leads to an immediate need to present systems training to staff, and to update procedures to ensure SRCs are issued to customers in the correct manner.
The new reporting rules mean that there is now a record of every single dissatisfaction handled by the firm, and therefore fair customer outcomes and compliant complaint handling should be demonstrable in every instances. This has exposed some firms’ ability to appropriately identify and handle complaints in their front-line and client service departments, or those who do not handle complaints often. Reasons for this typically include:.
Unfortunately, this has also led to the inherent expectation that front-line staff, who might receive complaints infrequently, have the ability to serve as skilled complaint handlers. For some team members, this will feel like a change to their role, so firms ought to provide the appropriate support to individuals for them to execute effective complaint handling that meets regulatory requirements.
Additionally this, the regulatory definition of a complaint- and a firm’s treatment of it- has entered into the center stage. Previously, ‘minor’ or ‘immaterial’ complaints might be quickly dealt with and resolved without too much concern for whether the regulatory definition of a complaint had been met. Now that all complaints are recorded, firms need to be confident that complaints are being identified in line with regulatory expectations, resulting in ‘materiality’ coming into question. This serves to make the understanding of what is and isn’t a complaint an intrinsic part of the process, and comes at the same time as an increased reliance on non-skilled frontline staff to perform complaint handling.
These changes have also meant that firms’ operating models and controls have had to be increased, since added departments and complaint channels should be more closely monitored. Some firms have miscalculated the extent of the required changes.
HOW CAN FIRMS ADDRESS THE CURRENT CHALLENGES?
Firms should reevaluate their complaint handling operating model whilst considering the FCA’s expectations around a ‘fair customer outcome – at the first possible opportunity’, and whilst also reviewing their “risk appetite”. They should be comfortable that complaints will be effectively identified and handled in every front-line area, with relevant evidence of good practice recorded and retained.
Regardless of the process for complaints a firm deems appropriate, as a minimum, complaints ought to be identified successfully by front-line staff, so a level of training, guidance and support is required on an immediate and ongoing basis to reduce ‘knowledge gap’ and ‘skill fade’ threats where complaint handling is not the day-to-day job.
The expectations of staff and the firm should be assessed so as to gain insight on effective ways to align the two. As part of its suite of training pertaining to complaints, firms should also aim to improve their staff members’s contextual knowledge around why effective complaint handling is vital across the industry today. They could also use this opportunity to review their complaint handling culture, and reaffirming the crucial elements of treating customers fairly, where appropriate.
Firms should ensure that they have a clear and, most notably, consistent interpretation of a complaint which gives context and meaning to the idea of ‘materiality’, using a broad spread of real examples in line with their risk appetite.
Firms’ operational controls under the former rules (including quality assurance (QA), training & competence (T&C), MI, RCA and governance arrangements) may never give the full understanding of complaint handling across the company, leading to an increased risk of unjustifiable customer outcomes and regulatory breaches.
Therefore, in order for the firm to show compliant complaint handling to the regulator, these operational controls have to be appropriately broadened (while ensuring a risk-based approach) to give a detailed view of complaint handling in all areas. This causes updated requirements for QA and RCA frameworks, T&C schemes, MI reports, scorecards, training programmes, governance structures and agendas; to name but a few.
Finally, firms should be satisfied that their systems and infrastructure allows them to record, report and handle complaints in line with regulatory expectations. This means ensuring that calls are recorded (i.e. interactions can be evidenced), all relevant individuals have access to the firm’s complaint handling system and the system has the capacity to support effective MI and RCA.
A CONTINUED EXPERIENCE TOWARDS COMPLAINTS EXCELLENCE.
Alongside the initial challenges that were projected at the outset of PS15/ 19 and during the prior consultation, there have been some inadvertent issues arising through the pragmatic implementation of the rules which are more nuanced and tougher for firms to diagnose.
Firms wishing to gain assurance that they are reacting appropriately to these challenges can determine their strategy to the areas above to give themselves a richer picture. It is needless to say perfectly natural that problems should arise when such a significant change is executed, nonetheless it is the ability to react to these challenges with appropriate and proportionate action that will differentiate firms on the market.
If you need assessments of your complaints management, systems and controls or testing of embeddedness of your implementation, contact Compliance Consultant on
The final two pieces of UK legislation implementing MiFID II were laid before Parliament on 26th June which give the FCA powers to make certain of the changes to the handbook rules (such as the financial promotion rules) and to carry out certain administrative tasks linked to implementation (such as setting position limits).
These are the:
Data Reporting Services Provider Regulations http://www.legislation.gov.uk/id/uksi/2017/699
Markets in Financial Instruments Regulations http://www.legislation.gov.uk/id/uksi/2017/701
With that in mind, I thought I would just remind you of what’s happened and what’s on the radar that you may need some assistance with the planning and implementation of.
See Our Special Offers At The Foot Of This Article
Save Money On Your AML Manual & Governance Review!
These areas are;
Questions to ask
Do we as a company understand;
These issues will not be changing any more, if these are not addressed immediately by firms spending a little money now, they are going to be spending absolute fortunes at the last minute. All firms will have to demonstrate “on demand” that they have everything in place.
You may find these links useful http://www.complianceconsultant.org/so-remarkably-simple-yet-detailed-and-thorough-compliance-risk-management-reference-system/ and https://www.linkedin.com/pulse/do-you-know-how-impacted-lee-werrell
Any firms that may need assistance with any of these areas can contact us for support on 0203 815 7939. Please be aware that our resources are limited and bookings for this work are already being placed. Depending on the size of your project, discounts of up to 20% are available.
If you would like any further information, please drop me a line.
Special Offers For Limited Number And/Or Date
If you want to get an up-to-date AML & CTF Manual, with 1/3rd Off please click on this link (http://aml-compliance-manual-ofac-sanctions-ctf.co.uk) and use the code “CCMLD4” in the payment box for a full 1/3rd discount! Hurry because this only valid for the first 25!
If you want to take advantage of our policy checking offer, go to our special offer at http://www.complianceconsultant.org/product/regulatory-changes-will-force-governance-reviews but hurry, this is only on sale until the 21st July!
On the 15th March 2017, the UK Government announced the creation of a new watchdog for anti-money laundering.
Named the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), it aims to tackle the methods of financial criminals by both stepping up standards of anti-money laundering (AML) supervision and closing loopholes in guidance that can be exploited to move illicit funds.
The UK Government’s ‘Action Plan for Anti-Money Laundering and Counter-Terrorist Financing’, released in April 2016, included an objective to review and improve the effectiveness of AML and CTF supervision. Subsequently, between April and June 2016, HM Treasury undertook a review of the UK AML / CTF supervisory regime. The review involved an audit of the FCA, Serious Fraud Office (SFO), HM Revenue and Customs (HMRC) and the National Crime Agency (NCA).
A key theme running through the review was a lack of consistency and potential confusion caused by the number of supervisory bodies overseeing firms’ activity in this area. It also referred to the guidance provided by legal and accounting firms, which is sometimes conflicting in its message.
All of this has the potential to create loopholes that criminals can exploit – as such there is a need to seek a more consistent approach to both supervision and guidance. OPBAS will seek to better unify the various industry, regulatory and legislative approaches.
OPBAS will have overall responsibility for the various supervisory organisations involved to ensure consistency of approach.
It will also set out how these bodies can comply with supervisory standards once they are updated to incorporate requirements of the EU’s 4th Anti-Money Laundering Directive (4AMLD), due to be implemented by the UK on the 26th July 2017.
More specifically, OPBAS’s objectives are to:
OPBAS is due to be legislated for by the end of this year and operational from the start of 2018, and we can anticipate new guidance to be released shortly after this.
OPBAS will become operational several months after the updated money laundering regulations are implemented, but firms will not want to wait until this time to make sure they are compliant.
The new office will sit within the FCA and operate in line with its existing governance structure. AML supervision is already an area of strong focus for regulators and was earmarked as a priority by the FCA in its 2016 / 17 Business Plan as it looked to broaden its Systematic Anti-Money Laundering Programme (SAMLP). This focus will increase into 2017 / 18.
Not only is the focus increasing in terms of regulatory output; the level of insight FCA receives back on these issues continues to increase with the implementation of REP-CRIM financial crime reporting in January 2017. This extra insight being gained by regulators will serve to enhance their view – this may manifest itself in further changes to supervision, and firms will need to continue to keep abreast of any developments.
The creation of OPBAS will mean increased scrutiny of professional AML supervisory bodies in terms of how they supervise AML and CTF compliance. This will create a knock-on effect for firms themselves, which could quickly feel the effects of this closer supervision. Following some uncertainty in terms of AML guidance from a supervisory point of view, the intention of regulators will be to ensure enforcement action is taken should deficiencies be identified – this has been a well-documented challenge in the current regulatory environment.
With the Government response on how money laundering regulations will be incorporated due in April, supervisory bodies may arguably be left with little time to interpret the regulations and revise their rules and guidance for firms in time for the 26th July and 4AMLD. This could in turn challenge firms’ ability to prepare for the changes. Staying abreast of developments in this space with the aim of prompt but proportionate action (when appropriate) should be firms’ current focus.
To help with your Anti-Money Laundering procedures as well as other Compliance support services, please contact us on 0203 815 7939
A common misconception is that the suitability report has to ‘round up’ the whole process, discussions and background information that has occurred to date. It doesn’t. It simply forms part of the process of telling the story and, from a compliance perspective, will be read in conjunction with the rest of the data and information contained within the file.
This is good news. It means we can legitimately start taking ‘superfluous’ information out of the suitability report and make it shorter and more client-friendly.
Based on the regulators Principle 9 (customers: relationships of trust) “A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgement.”
In conjunction to that, and by extension, COBS 9.2.1 R states;
“(1) A firm must take reasonable steps to ensure that a personal recommendation, or a decision to trade, is suitable for its client.
(2) When making the personal recommendation or managing his investments, the firm must obtain the necessary information regarding the client’s:
(a) knowledge and experience in the investment field relevant to the specific type of designated investment or service;
(b) financial situation; and
(c) investment objectives;
so as to enable the firm to make the recommendation, or take the decision, which is suitable for him.”
More recently, the Financial Ombudsman Service (FOS) has reiterated its advice to IFA’s to make suitability reports as tailored and personalised to the client as possible.
Richard Thompson, FOS principal ombudsman, speaking at the Money Marketing Interactive conference in May 2017, outlined how advisers should present a defence at the FOS when faced with a complaint. He said: “The more you can do to personalise and tailor that documentation, that suitability report around the customer and their circumstances, the better placed you will be to defend in the event that someone does wish to bring a complaint.”
While he admitted that “standard documentation always has its place” to help clarity or understanding for consumers, it also had its “limitations”.
Compliance Consultant has been championing the reduction of Suitability Report Length and rationalising the content to flow better and be more relevant. Founder and CEO of Compliance Consultant, Lee Werrell, said that
“Members of Networks and those using standardised ‘off-the-shelf’ compliance providers are given a bland, comprehensive and rigid suitability report template, based on the ancient ‘tied-agent’ model of command and control. This is so out of date in today’s relationship selling methodology that all the report does is take up the advisers time and contains mainly dross that used to be considered as ‘covering one’s backside’.”
Further to that, Werrell added “If you can explore and discuss the various elements of COBS9 with the client, and record their own words, you can replay it in the Suitability Report as further evidence of the client’s needs. From the fact find, file notes and through to the suitability report, there should be a flowing story; a story of demands, needs and satisfaction.”
At the conference, Thompson added that using the client’s own words in documentation was the “gold standard” when it came to best practice. He said: “It helps when we can see things in the advisers own words…The gold standard is the clients own words from what they understood then.” He also urged advisers to steer clear of jargon-heavy product information.
Compliance Consultant can conduct an audit of your firm and provide a comprehensive report setting out the work into the general areas which the FCA often express interest and which generate most concerns, incorporating the latest hotspots.
The scope of the work required by FCA visits, are, in our view, extensive and required to be delivered in a short space of time. Having all the evidence readily available, including ongoing action plans and risk identification is vital. The Compliance Consultant team is qualified to undertake this work has experience of working with many financial institutions and regulators, ranging from working at board level, senior management, line managers and directly supervising sales personnel.Call us on 020 3815 7939 for details, watch the video at https://youtu.be/z_hSI9tLCVI or go to http://wp.me/p7OMfd-vT.
An additional service we can provide is the relevant rules mapping from the FCA Handbook to your firm. Ask us for details, or go to the website via this link http://wp.me/p7OMfd-A2.
Compliance Consultant – “Making Compliance Work!”
Call us on 020 3815 7939