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Can You Or Your Firm Really Afford Generic Ongoing Compliance Support?

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Compliance is an ambivalent function. On the one hand you are considered as the regulators’ ally inside the investment firm; overseeing the implementation of their regulation. Conversely, you are paid by the investment company and part of their culture and hierarchy. You might say ‘front office’ (traders making the money) looks at compliance the way compliance successively sees the regulators.

The problem with most companies, whether they be IFAs, Stockbrokers, Payment Services or whatever sector, is that the Compliance Officer is treated unfairly, if they are running the compliance function as part of their job. Whether they are advising, trading or operate the financial side of the business, unlike 10 or perhaps 5 years ago, there is far too much to get done, to satisfy the criteria of the regulatory authorities.

Obviously there are 5 main options;

  • You can continue as normal and let things get slowly further and further behind; not a great option, running the gauntlet of “not” being visited.
  • You can devote more time to the compliance aspect, rejig the annual compliance monitoring plan and enlist others in order to help; but you will have to supervise their efforts and if they are not “compliance” people, it may be a lot more work than you save.
  • Engage some of the many consultancies that are either big 5 or quasi big 5, made successful by all the mis-selling of yesteryear and not necessarily focused on your sort of business. These guys usually want a big chunk of profits to be “available” and provide ongoing support.
  • You can recruit a compliance manager (or team) to carry out the main bodies of work required, and have regular meetings to ensure they are staying on top of everything. This is expensive with all the rights of employees and the fringe benefits.
  • The final option is to engage with a particular niche consultancy that only provided experienced and qualified consultants in order to help you fit in all the compliance obligations and maintain your day job. Not the cheapest option, but a scholar would never confuse cost with price.

The regulator’s business plan for 2018 has created a raft of focused areas for the remainder of 2018 and start of 2019. From the FCA Handbook there are a range of hotspots and they are determined to use their powers under the FSMA 2000 to progress, investigate and enforce where appropriate. Whatever FCA Regulated Activities you have permissions for, I am sure you will see that there is something for everyone.
The following list identifies the regulators cross-sector priorities to be addressed over the coming few months:
– Firms’ culture and governance
– Tackling Financial crime (fraud & scams) & anti-money laundering (AML).
– Data security, resilience and outsourcing.
– Innovation, big data, technology and competition.
– Treatment of existing customers.
– Long-term savings, pensions and intergenerational differences.
– High cost credit.
– Wholesale financial markets.
– Investment Management.
As a component of the FCA’s ongoing programme of work they continue to mitigate harm from firms selling Contracts for Difference (CFDs) and spread bets to retail customers who often do not comprehend the risks of these complicated, leveraged instruments.
They are also focused on binary options, which entered the FCA’s regime from January 2018. Their work involves a coordinated programme of policy and supervisory activity. In 2018, they will evaluate how well their interventions have worked and act where firms fall down and cannot meet expectations.
The FCA support the European Securities and Markets Authority’s (ESMA) agreed EU-wide temporary product intervention measures announced 27th March 2018. These include the prohibition of the marketing, distribution or sale of binary options to retail clients and a series of constraints on the marketing, distribution or sale of CFDs to retail clients, including rolling spot forex. The FCA expect to consult on whether to apply the ESMA measures on a permanent basis to firms offering CFDs and binary options to retail clients.
The importance of self-governance and accountability: this is shown in the extension of the Senior Managers and Certification Regime (SM&CR) to all regulated firms, including dual regulated insurers. The FCA’s policy statement and new rules will be published in the summer of 2018 and the SM&CR will be extended to insurers on 10 December 2018.
There is a huge raft of work going on and that is quite apart from the changes to the FCA Handbook after MiFID II, and your own monitoring plan, that we calculate for most firms includes over 60 different activities, from governance reviews (several day’s work in itself) through to whistleblowing and reporting (Gabriel returns anyone?), financial promotions and conflicts of interest through to KYC and Money Laundering and TCF, to name but a few.
With Liz Field of PIMFA joining with the FCA in encouraging advisers to whistleblow on “bad behaviour” within the profession in order to bring down the cost of the FSCS levy, all firms should make certain they have their house in order if they have the time.
Compliance Consultant offers various support packages that can be managed on-site or remotely (depending on your needs), or a mixture of both. Experienced and professionally qualified people that can be as flexible as you need, with the goal of providing you with the best compliance function possible, with regular reports by email of the work they have planned, work that they have undertaken and any challenges identified along the way.
Lee Werrell Chartered FCSI
Compliance Doctor
Making Compliance Work.


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