Hot Topics

ATEB has completed a number of Section 166 Skilled Persons reviews - here are some of the lessons learnt.

MiFID II PROD rules require firms to ensure products and funds are matched to the the right 'target market' clients.

Senior Managers & Certification Regime will apply to all FCA regulated firms from 9 December 2019 - are you ready?

Firms that deal with a DFM on an agent as client basis could be exposed to hidden risks.

Many providers, platforms and adviser firms are not yet properly compliant with the aggregated costs disclosure requirements.

Many cash flow models are not compliant with FCA rules on growth assumptions. Are yours?

Firms that advise on DB transfers need a process for assessing Transfer Risk.

Many firms have not amended their status disclosure to reflect the MiFIDII definition of independence.

Regulatory Visit Preparation

Most firms will receive a regulatory inspection visit at some time. Admittedly, the FCA’s approach to supervision has changed and although visits are not as frequent, they are cleverly targeted. They have settled on the thematic review as an efficient means of meeting their legislative supervisory obligations and for getting messages across to firms, the sequence of events normally being:

  1. The FCA identify an area of concern, for example, pension switching;

  2. They identify firms active in the marketplace (they have readily available management information);

  3. They visit a representative number of firms;

  4. They produce a report that invariably finds issues;

  5. They issue the report to the industry instructing firms to undertake internal reviews;

  6. They warn firms that they will be checking that firms have complied with the requirements and will not hesitate to sanction firms that have not complied.

This last stage is clever; while they may never visit, the implication is clear. Firms cannot ignore the need to review or they run the risk of severe regulatory sanction at some point in the future.

You’d be wise therefore to proactively plan for such an eventuality, but how can you do this?

Well, any good risk management strategy will aim to mitigate business downtime, which could be caused by a number of factors, one being regulatory investigation leading potentially to internal or section 166 review, regulatory fine or cessation of activities.

Here are some thought starters:

  • Have you read the latest FCA Business Plan which highlights areas of regulatory concern (produced annually)?

  • Do you know what the current industry ‘hot topics’ are?

  • Can you produce detailed management information and do you analyse the data?

  • Do you have a risk management plan and have you tested it?

ATEB can help you to proactively manage this risk. The sooner you start however, the better. If you leave it until something official drops through your letterbox marked ‘FCA’ and ‘Urgent’, it may already be too late.