Remarkably Simple Compliance: How Are You Impacted?
An indispensable step for any Compliance Officer is the identification of your business departments and the impacting regulations.
With an increasing amount of regulatory bodies, the changing regulatory scenery and recently the Senior Managers and Certification Regime (awaiting further consultation), putting managers directly in the firing line, risk and compliance functions are really feeling the pressure to ensure they are completely knowledgeable about what their firms must do to manage compliance.
Nonetheless, if you picture providing the optimal compliance service that is practical to your firm each and every single day, then you must understand how and where your firm stands. The primary step is identifying the high-level activities and must now tease out the more detailed aspects and duties of being a Compliance Officer.
To undertake this you could take a new notebook and address the following rough sections;
- Each entity within your group including appointed reps, introducer appointed representatives or other subsidiary or joint-venture partners that your firm may have taken part in business with;
- Each business unit and support sections within each entity;
- If a group, what are the distinct reporting lines and what differences/similarities could there be?
- External suppliers including anything that maybe outsourced from IT to Para-planning, Legal to Banking;
- The regulatory legal system where you are operating, for most this will be the UK and at most Europe nevertheless many firms today offer offshore investment services.
The Detailed Rules Mapping
Now to the details and heart of the matter. If you get yourself a spread sheet with the column titles referencing the handbooks starting with SYSC, COBS, BIPRU, INSPRU, etc. and with rows complete the titles of functions including trading desks, middle office, settlement and other areas of activity. For retail distribution perhaps its, life sales, pensions sales, investment sales, mortgages etc. across the top. Your grid will soon materialise. From this basic grid you can identify where the relevant handbooks would link with your firm and those who run it, and if it is not applicable, note why not.
There is, needless to say, a need to understand business units in your very own firm whether these units take the form of sales teams or expert areas with their own specific advisers you will obviously want to understand certain basics alongside the above;
- senior management compliance concerns
- specific product services or functions
- the main activity for income generation
- anything considered as a unique selling point
- any point of sale or post sale documentation used if different to the principal
- target client base or segment
- methods of advertising and marketing
- IT systems
- most valued clients
- top deals of the previous 1 Year
- governance; policies and procedures and how they may differ to the principal.
- conflicts of interest, regulatory issues in the last 1 Year, risks, regulatory contact the last One Year.
- any major transformations in the last 12 months; and.
- Any major updates planned for the next One Year.
At this stage it may also be worth considering risk management and mitigation programs to be carried out for each legislative section you may have responsibility for within your firm. You might like to consider covering the broad list below;.
- Specific responsibility if the need is for anybody apart from the compliance officer.
- A gauge or measure somehow of how the firm is influenced by this legislation and particularly the sub-parts affected.
- What you think about the key risks to be.
- The controls you have identified in relation to each risk.
- Any weaknesses in the control framework that may must be addressed; these may possibly be risk rated.
- An action plan prepared and designed to address any weaknesses that you may have uncovered in your investigations. You should without a doubt ensure that you record and track progress regularly.
- A review frequency for when you are planning to revisit your current findings. More complicated areas are probably to need a more frequent visit.
- The overall risk rating you apply to this specific area of legislation and this should take into account the seriousness of penalties or frequency they are imposed by the regulator.
With the application of the Regulatory and Risk Based Footprint Mapping, in addition to the Compliance Consultant Charting Tool, it is easily demonstrated where the regulatory component requirements impact your firm at differing levels within your organisation. The impact is identified, mitigation measures implemented and controls recorded for future inspection, reference or supply to the regulator on demand.
Your Fully reportable database of’ regulations to operations’ will give you fast access to any segment of regulation ensuring that you always have a clear understanding of all your obligations, mapped activities and ownership. A vital compliance tool that ensures Senior Management not only sleep at night but they are comforted that they are “Making Compliance Work”.
Its not all child’s play, but it can be made simple by using the right consultancy!
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