Styperson POPE

Strategy & Compliance for Investment Firms

Compliance Audits & Monitoring Visits

This post is just a quick anatomy of a compliance monitoring visit we’re in the middle of for an FSA authorised Investment Firm.  We tailor all our compliance audits and monitoring programmes to our clients’ particular businesses and we make sure that they add value by focussing not only on the bare FSA requirements but also commenting on best practice and efficiencies.  We have developed tried and tested monitoring formats for:

Like most of our clients, the one who’s ‘enjoyed’ today’s compliance visit, is on a quarterly programme with a slightly more expanded report at mid-year and a full review at each year end.  Today (Friday) is day one of the full review, continuing Monday, and ending in the delivery of a report to the Board by the close of next week.  It’s not the best time to be taking several days out to run a full compliance audit… but then it never is!

Two of us are splitting the work, with me reviewing all of their regulated activities, policies, procedures, management systems, governance provisions, and Gabriel reports (which should be OK because we’re involved in all their FSA reporting).  Their in-house Compliance Manager is reviewing their files and records including KYC and AML, financial promotions, client categorisation, periodic statements, and suitability assessments (each based on a sample I chose at random).

Despite being only one day in, the visit has already proved invaluable with a big gap identified in their conduct of business (COBS) procedures (actually, they’d done everything right but didn’t understand why so had gone to expensive lawyers for advice each time), and a few gaps in management systems which can very easily be plugged (once you know they’re there!).

We’ll have plenty of recommendations to make and we categorise them all based on the urgency of the change and the cost or effort of completing it.  Generally we like to see through the changes we suggest but we also understand the costs involved in ‘gold plating’ and accept that perfection may be a longer-term objective!

One inevitable consequence of a compliance monitoring visit is some additional training and it’s a great way to identify areas of need.  This may be informal training for the Board in the form of talking through the report, or it might be identifying the key topics for a firm-wide workshop.

It’s easy to forget how valuable a compliance audit or monitoring visit can be and often it’s the most cost effective way of discovering problems (it’s certainly a lot cheaper than letting them revel themselves!).  If you’d like to discuss what kind of visit would be most suited to your business, do please give Simon Webber, STYPERSON POPE‘s Managing Director, a call on 07710 260 717, or e-mail sw@strategic-compliance.co.uk.

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