Many regulated firms have compliance frameworks in place which appear satisfactory on paper but contain specific and recurring gaps that are only revealed on inspection.

Financial Promotions Sign-Off

So, first up is Financial Promotions Sign-Off. I regularly come across firms who have a Framework or Guidance Notes for Financial Promotions but no actual documented procedure for approval of individual financial promotions. The procedure for approval of a financial promotion needs to clearly state who the appropriate approver is for that promotion (who has been appointed to approve financial promotions) and for each financial promotion, a record of approval needs to be retained.

SM&CR Fitness and Propriety Records

SM&CR Fitness and Propriety Records: Many firms complete the required annual assessment of certified staff with the relevant evidence of their assessment; however, the key is to have sufficient detail recorded of what was assessed and by whom. Also, firms often fail to include all staff that require assessment, including those who have changed roles mid-year.

Wind-Down Plans

A wind-down plan is often a requirement of the FCA for firms who are authorized. Many firms have a plan which has been left to gather dust as products and accounts have been closed. The plan should be reviewed annually by management to check that it is still relevant to the current business, customer base and funding position. See also FCA Compliance Consultants.

Complaints MI Reported to the Board

Although an organisation’s complaints data is typically handled by its operational teams, it is rare for the management information reported to the Board to extend much beyond simple totals. A more useful view for the Board would be of numbers of complaints, together with an analysis of their root causes and trends – all reported on a periodic basis.

Appointed Representative Oversight

Many principal firms fail to realise the extent of their responsibilities towards their appointed representatives. Principal firms are required to monitor their appointed representatives on an on-going basis, to review them from time to time and to set out clear procedures for dealing with any problems that may arise. Informal arrangements are not sufficient and firms must ensure that their responsibilities are clearly documented.

An annual review against these common compliance areas will reveal most errors before the regulator does.