Chapter 2 - Managing regulatory relationships

Question 1

How might medium and high impact firms coordinate work with the regulator?

Answer 1

Through a relationship manager who carries out risk assessments and determines a risk mitigation programme proportionate to the risks identified.

Question 2

How might low impact firms coordinate work with the regulator?

Answer 2

Base line monitoring of financial and other returns with any actions driven by info in these returns. They could also be part of a thematic review as part of a sector review by the regulator.

Question 3

What are the benefits of a good relationship with a regulator?

Answer 3

1. Seek regulator’s advice on new issues and business plans.

2. Provide input into the formation of regulation through consultations.

Question 4

What types of information may be submitted to the regulator when seeking authorisation?

Answer 4

• Org charts
• Business plan
• Compliance procedures
• Details of the firm’s professional advisers
• Opening balance sheet
• Forecast closing balance sheet after 12 months’ trading.
• Monthly profit and loss account after 12 months’ trading.
• Monthly cash flow forecast
• Latest annual accounts
• Professional indemnity insurance quotation.

Question 5

What will the regulator look at as part of a scheduled visit?

Answer 5

• Perform a risk assessment

- Thematic research and investigation.

Question 6

Where might a dawn raid be conducted?

Answer 6

• Various offices

- Homes of key individuals

Question 7

What should a firm do at the start of a raid?

Answer 7

Check the warrant is in order and ensure that search team does not exceed the authority granted by the warrant.

Question 8

What should the warrant specify?

Answer 8

• Date of issue
• Legal authority by which the warrant was issued
• The regulatory authority to whom the warrant was granted
• Each set of premises to be searched
• The types of articles, materials, or persons sought.

Question 9

What shouldn’t be provided to regulators/police?

Answer 9

Legally privileged documents and those that might lead to self incrimination.

Question 10

What should be done before the regulators leave?

Answer 10

A copy of the documentation, materials seized should be obtained for the firm’s records.

Question 11

What actions can be taken to prepare for a raid?

Answer 11

• Training on procedures to follow
• Training on ascertaining scope of information needed.
• Training on legal consequences of failing to cooperate and tipping off.
• Training on key staff to be notified in the event of a raid.
• Media and customer relations protocols.

Question 12

What should you check on the warrant?

Answer 12

• is your premises listed on the warrant?
• has the warrant been signed, dated and sealed?
• are the investigators listed on the warrant?

Question 13

What is your right in relation to providing information?

Answer 13

You don’t have to provide privileged legal advice and you can redact irrelevant info on documents you submit.