Your S166 – How To Recognise When Things Go Wrong – Part 1
The FCA in particular has the difficult position of dealing with a range of people in a variety of businesses across a plethora of business models.
The language they use in their follow up letters can often give an indication as to where they feel the relationship has got to. There are warning signs.
Typically the letters from the Enforcement Department or your firm’s Supervisor will contain a precis of the situation that has arisen to date, citing the various person’s, actions and events that are salient to the issue at hand.
Often the first indication that the regulator is not happy with the situation and could be losing their patience, is a statement similar to “FCA Supervision commissioned the s.166 report to verify [type of expected work] had been completed to the required standard” which is a fact based explanation.
Then they may well give a reason why they had gone to the extreme of a S166 with a phrase similar to; “based on our supervisory history of the firm, we had concerns that the Executive and the Board had not previously given appropriate consideration, and devoted the required resources, to meeting its regulatory expectations.”
This means effectively that they have received no evidence of the work having been completed to any level or standard expected or that there are no independent assessments available to ascertain the activity alleged to have taken place.
They are not saying that the work has not been done, simply that they had not been convinced in the ability of the firm to have complied with all skilled persons requests due to inability, inaccessability or non existence of the document or file.
If this is coupled with a statement from the original SP Report that stated something along the lines of “in the course of this review we have received the co-operation we required”, this could spell trouble as a possible infringement of SP 5.3.4.G.
The Skilled Person is not in place to find fault, pick holes or criticise unduly, they are there to do a factual and evidence based audit, identifying the issues as they initially appear, but can broaden the scope to identify the length and breadth of any issues.
SUP 5.3.4 G states that the FCA will have regard to circumstances relating to the firm, for example:
(1) attitude of the firm: whether the firm is being cooperative;
(2) history of similar issues: whether similar issues have arisen in the past and, if so, whether timely corrective action was taken;
(3) quality of a firm’s systems and records: whether the FCA has confidence that the firm has the ability to provide the required information;
(4) objectivity: whether the FCA has confidence in the firm’s willingness and ability to deliver an objective report;
(5) conflicts of interest: whether the subject matter of the enquiries or the report involves actual or potential misconduct and it would be inappropriate for the FCA to rely on the firm itself to enquire into the matter; and
(6) knowledge or expertise available to the firm: whether it would be appropriate to involve a third party with the required technical expertise.
So you can see that the pushing back, evasive attitude of staff, dragging of feet and delaying tactics actually harm your case over the long term and it is vital that you have a dispassionate person dealing with the SP to facilitate good relations and act in your best interests. Spinning a yarn is not expected to get much distance with anyone and at the end of the day, non-cooperation by failing to provide a sensible and pragmatic response to queries, concerns or issues, just puts you in a bad light.
Although you may have seen the final report and considered it reasonable, there are often unsaid themes running through it that, if you are not careful, can trip you up and cause further angst.
Compliance Consultant can assist you in all of the areas and can assist in the smooth flow of information to the ‘Skilled Person’ or their staff and assist in answering their queries, provide the right “go to” people etc.
While we look after the regulatory interpretation and cover your back, this then allows you to get on with what you are good at.
At Compliance Consultant we provide all of the service with a reduced body-count and …
… laser focused precision, using your people and our expertise to the best effect.
Call us on 020 7097 1434
or Email firstname.lastname@example.org
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Your S166-How To Recognise When Things Go Wrong-Part 1