HOW TO PREPARE FOR A VISIT FROM THE FCA

Transcription

1 ADVISER KNOWHOW THE WEEKLY TV PROGRAMME FOR ADVISERS BY ADVISERS HOW TO PREPARE FOR A VISIT FROM THE FCA The Financial Conduct Authority has only been on the block in its new form for about four months and has made it clear that while it might not have as much face time with small firms it will have many different touch points with firms. Advisers have adjusted their systems and controls and revisited investment propositions in case of a quick visit from the regulator, but what else should firms consider before the regulator strolls into their office? KEY POINTS 1 Strengthening internal compliance 2 How to keep up with the FCA 3 What to expect from a visit

2 KEY POINTS KEY POINTS FOR THIS WEEK S ADVISER KNOWHOW FEATURING AN INTERVIEW WITH, MANAGING DIRECTOR OF IFA ALMARY GREEN: STRENGTHENING INTERNAL COMPLIANCE 1 2 Update documentation, especially when it comes to making adviser charging clear and make sure clients understand it and are on board too Consider appointing someone or hiring someone to be solely focused on compliance and systems and controls Constantly review propositions and business, make sure clients are at the heart of every decision 3 HOW TO KEEP UP WITH THE FCA Go to their events Sign up and read the Regulation Roundup Follow up on new policy and pay attention to speeches Don t be scared to approach the regulator or to keep an active dialogue with them WHAT TO EXPECT FROM A VISIT Interviews with all levels of staff: advisers, paraplanners and administration Sit in on client meetings Can supervise up to three days of office activity

3 PROGRAMME TRANSCRIPT It s a case of making sure that you are watching what they want. Regulation is forever a changing Darren Thomas, Thomas & Thomas Welcome to Adviser KnowHow. This week we ll be discussing how to prepare for a visit from the Financial Conduct Authority. The FCA has stated that it will take a more light-touch approach to regulation, having direct contact with small firms maybe once every four years. But its supervision team has kept an eye on Adviser firms, following the implementation of the Retail Distribution Review. How can firms ensure that the regulator gets the best impression after one visit? Here with me now is Carl Lamb, managing director of Almary Green, who recently invited the FCA to his office. But, before we speak to Carl, let s have a look at what other financial advisers have to say about preparing for the FCA. VOX POPS What have you done to strengthen your internal compliance system? DARREN THOMAS, Thomas & Thomas We ve really looked at obviously our documentation to make sure that it s all up together and ready, although a lot of the work went in before RDR. We felt that staying on the old trail model, we d always worked with having no initial commission, but we felt that trail had worked for a period, but with the new era coming in, we had to spend literally hundreds of hours getting our clients all moved across to a new adviser charging or separate fee arrangement. So that s really where the work has gone for us. RICHARD HANSELL, Chetwood I think the important things with internal compliance are resources and systems and controls. So we recruited a single individual who deals with our firm compliance and TNC scheme. We also reviewed our systems and controls to make sure that, in line with the FCA, they are robust. Really I was surprised, when we saw them just two weeks ago, at the level of detail that they were expecting from us with regards to management information and particular products such as, at the press of a button, to be able to report on clients on income drawdown, who are at maximum GAD, who are at minimum GAD and zero income. So we ve done more work on our back office system with regards to that. The FCA have said they ll be more pro-active but also have a lighter touch with smaller firms. How have you interpreted that? DARREN THOMAS It s a case of making sure that you are watching what they want. Regulation is forever a changing, so you need to make sure that you re up on what they want. So going to their events, things that they put on, reading things like the regulation roundup, which I have always found very useful. It keeps you in tune with their thinking, and makes sure really that you are proactively selfregulating. RICHARD HANSELL Well again, if I go back to the previous point, the fact that we are C4, we go to any workshops. The FCA, as the FSA have done for the last three years, now offer you the chance to pay to come along to days where they feed back to you on their thematic reviews. As long as you do that and you stay in touch with them, I don t see it being a problem. END OF VOX POPS, New Model Adviser So, why did you invite the FCA to your office? What opportunity did you see there?, Almary Green Well, as a firm we are a member of Gill Cardy s IFA centre and the FCA approached Gill with regards to getting other firms to volunteer. The main reason why we volunteered was that we are now into a new era of regulation, and we can only expect to shape the new world we are living in if we take active dialogue with the regulator. What did you do to prepare for the FCA visit? Well, you may find this quite strange, actually, but we did very little preparation because it was Chatham House Rule, so we wanted to bare our soul, effectively lay out all our procedures as we saw them. What we were looking for them to do was

4 The FCA spent three days in our office, and we invited them to look at the whole business, from root to branch Carl Lamb, Almary Green effectively to put a slider all over them and say, yes your interpretation of the rules are correct, or alternatively, you could improve on this aspect here. So our preparation was pretty minimal. In terms of compliance, what back office systems did you feel were needed for this new regulatory regime? Obviously as a firm, we take compliance very seriously, so we employ our own full time compliance officer, we have monthly board meetings, so we are always looking at our TNC, we re also making sure that the culture of the firm etcetera is all embedded. So from our perspective we felt pretty comfortable, both pre-rdr and post-rdr about how the business is run. So a visit from the regulator didn t really concern us. What sense did you get from the visit? How long were the FCA there and what were they mainly looking at? The FCA spent three days in our office, and we invited them to look at the whole business, from root to branch. So they spent time with administrators, they spent time with para-planers and also advisers. Equally, we took the gentleman concerned to a client visit, so that they could see how regulation works in the real world, with regards not to theory, but actually putting it into practice. We also discussed at length how providers have interpreted the RDR and how we have 85 different variations of the rules from 85 different providers and the headaches it causes. The FCA have said that they are going to be a bit more light-touched, but it does seem that they are a bit more engaged with the adviser community. What sense did you get in your visit with the FCA? I felt that they really wanted to get under the skin of how an adviser firm works. Obviously, we learnt things from them during the visit, but equally they took things away from ourselves. One of the things we did focus on was, for regulation to work moving forward, would be an ideal opportunity at least every six months for our senior regulator and in regional areas, say half a dozen firms meeting up so we could just chat through what we all thought are the problems and concerns and risks of the current modern regulation. What did you take away from the visit with the FCA? Did you go back and rejig anything within the firm? We slightly altered one or two procedures with regards to supervision aspects of our advisers, because we employ thirteen advisers. What I took was that they really wanted to work with us, and actually nobody should be worried or concerned about the FCA as long as you re running your business in a proper and fit manner. Thank you very much for coming in, Carl, and answering those questions. You can download the cribsheet for this week s edition at citywire.co.uk/ adviserknowhow or bnymellonam. co.uk/adviserknowhow. Or you can find the link and add your views on Twitter.

5 ADVISER KNOWHOW A PROGRAMME FOR ADVISERS BY ADVISERS Produced in association with BNY Mellon, Adviser KnowHow is a new groundbreaking programme, created specifically to help you and your business. Every week we speak directly to your peers in the industry to understand how they have addressed some of the key issues that advisers face every day of their working lives. Get involved and add your views on

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