Managing director of Bankhall Nick Kelly said the ongoing FSA’s supervision review focuses on a small number of directly-authorised firms.
However, Kelly expects the initiative to expand and follow the same route as the FSA’s Treating Customers Fairly (TCF) road shows which stretched over several years.
He said that the regulator is beginning to place greater emphasis on individuals holding controlling functions within adviser firms and making them more accountable for their actions.
“As part of its credible deterrence approach the FSA is also levying higher fines, which in 2010 almost trebled to £89m, compared to those in 2009. The FSA is sending out a clear message that firms need to ensure they have robust controls in place to protect themselves.”
The most common compliance features relate to issues around the suitability of advice, mortgage fraud and poor customer service.
In view of this, Bankhall has recommended that firms take appropriate measures to protect themselves, including demonstrating how and by whom the firm is being managed and controlled, and paperwork showing what management information is produced, and how this identifies and addresses current and potential risks to the firm and the customer base.
In addition, Bankhall suggests that firms keep documents to hand relating to the firm’s financial strength, regulatory reporting, ability to provide services and any plans they have in place to meet the Retail Distribution Review requirements.
It said that firms should also review their recruitment processes, particularly relevant for larger firms who need to ensure the right individual is recruited for any influential functions.
