chap 6 advanced Flashcards
undertaking compliance function - key issues
- scale of compliance function should reflect scale of broker
- implementation of maintenance and adequate policies to prevent failure
- compliance function must operate independently
- independent reporting lines
- seperation of compliance and internal audit
financial crime guidance
- governance
- structure
- risk assessment
- policies and procedures
- staff recruiting, vetting, training, awareness,
- quality of oversight
conflicts of interest *
dear ceo guide- approach, reviews, practice, management, focus on sme
thematic review finding - reliance on disclosure
Broker should consider whether the firm, its directors, employees, or persons indirectly involved with the firm:
- likely to make a financial gain or loss from a client
- has an interest in the outcome of a service or client transaction
- financial or other incentive relating to groups of clients
- carries on the same business as the client
- receives money goods or services seperate to commissions and fees
cs frameworks to influence the firms practice
tc should not be seen as compliance but a competitive edge
- technical knowledge, lunch and learns
- assess progress in line with firms strategy
- specific courses to deal with tcf and aml
- to assess actual skills and identify needs (acii)
- annual appraisals
tcf
- consumers confident firms fair treatment of customers central to corporate culture
- products/services marketed to meet the right needs and groups of people
- consumer provided with clear info,before, during and after pos
- where consumers receive advice, advice be suitable to their circumstances
- consumers provided with products as they would have expected them to perform
- consumers do not experience post sale barriers
complaints procedures- what brokers need to consider
- should consumer and comm custs be treated diff
- best method of communicating complaints procedure to clients
- best method of ensuring staff understand the procedures
- distinguish between complaints by seriousness
- how should decisions be made to escalate to ceo level
- how complaints should be recorded/processes audited
introducer appoined representative
- effectng introductions
- distributing non real time financial promotions
(retail staff who offer customers extended warranty insurance
ar - appointed representative
- permitted to carry on the business in the ar regs
- complies with the requirements under these regs
- principal has accepted responsbibility in writing
bribery act 2010
4 offenses, their application and consequences
- paying bribes
- receiving bribes
3, bribery of foreign public officials - failure of commercial orgs to prevent bribery (the company can be guilty even if no one knew of the bribery- eg the firm must show they have procedures in place to prevent bribes happening.
consequences
extra territoriality - prosecuted if brit national resident in britain regardless if act took place outside of uk
penalties- 10 years - unlimited fine
consideration of sanctions legislation - brokers must consider;
- what is the appropriate degree of training for employees
- how should the issues of sanctions be monitored
- how will a risk based approach work, should firm stop trading with certain individs, certain countries?
money laundering - new regs
- more detail on cust due dilligence, explicit requirement for firms to monitor business r.ships & firms identity
- vary cust due dilligence according to risk of money laundering, terrorism
- enhanced cust due dilligence for higher risks
- rely on certain other firms for cust identification
- classify the arrangements for the supervision of firms
IBER (insurance block exemption reg)
eu concern over premium allignment - bipar- demands and needs - placing
until 2010 brokers could not be prosecuted by competition laws
uk now prohibits- anti competitive agreements. arrangements
abuse of dominant market position
EU believes co-insurance reinsurance pools could be problematic
eu competition enquiry
- brokers act as adviser to clients and distributor to insurers- conflict of interest - commissions
- business insurance clients unable to make fully informed choices
- practices aiming for brokers to place insurance with particular insurers undermines fair competiton around financial strength, T&c’s, service
- disclosure of relevant info by intermediaries, remumeration
- sme clients unaware of the commission/intermediary fees- misconceptions in market
- careful consideration required in light of the above, will be reviewed alongside mifid (investment regs)
