Pt 4. The Regulation of Financial Services - Additional Oversight

Question 1

What part of the business does the senior manager have an overview of?

Answer 1

• Providing leadership
• Esuring business decisions andpriorities are aligned with the fairtreament of customer principle, e.g. TCF (Treating Customers Fairly).
• Ensuring firm has right controls in place and are being used.
• Overseeing recruitment, training and competence, and reward structure to ensure the fair treatment of customers is important part of staff behaviur and development.

Question 2

What areas should systems and controls cover?

Answer 2

• Reportng lines and how responsibilties are delegated.
• The compliance function
• Assessment of risks facing the business
• Management information
• Checking honest and competence of working in business, i.e. fit and proper tests
• Monitoring systems and controls
• Development and implementatin of business and remuneration strategy
• Business continuity in event of disaster or loss of key personnel
• Maintaining traiing and competency of staff they manage
• Record-keeping

Question 3

What should firms have in their framework for compliance support services?

Answer 3

• Assessment and covering the risks for their business
• Meeting regulatory requirements
• Checking the firm continues to be compliant

Question 4

When is compliance a firm’s responsibility?

Answer 4

• if FCA finds inqdequate controls in a firm, it may take action against the firms not its compliance consultant.
• FCA expects a firm to act on any serious recommendations.
• Whether firms get compliance support or not, they remain responsible for meeting FCA requirements.

Question 5

What should firms consider when choosing the right service?

Answer 5

• Consider what sort of support if ant the firms needs.
• Lots of different levels of service available including: initial risk assessment, business development, help with procedures, file audits, technical support, training, remedial work and PII cover.
• Aware if they only focus on one area, they may be missing important compliance issues elsewhere.

Question 6

What should firms consider when assessing and monitoring consultants?

Answer 6

• As part of due diligence, firms will want to ask potential consultants about experience, skills, competence and establish that they have knowledge and resources of what they need.
• FCA recommends firms agree standard of services they will receive from consultant with service level agreement; details should be received of work carried out, and recommendations in writing.

Question 7

What firms should consider when acting on recommendations?

Answer 7

• FCA expects firms to implement advice they are given if assessed they decide its appropriate.
• FCA is more likely to take action against firms if breach FCA requirements, and failed to act on previous recommendations from compliance consultant.

Question 8

What are capital adequacies calculations for accountants?

Answer 8

• Designed to ensure FCA regulated firms are able to meet liabilities when they are due, especially liabilities for claims from customers.
• Accountanting standards and legal regulations are designed to ensure financial info is presented in true and fair manner by companies for their shareholders.

Question 9

Under what circumstances are firms not required to appoint statutory auditor performing an annual external audit?

Answer 9

• Meet the Companies Act criteria for small companies audit exemption.
• Do not undertake any activity within scope of Markets in Financial Instruments Directive II (MiFID II), UCITS, IDD and are not an e-money issuer.