Every IFA and mortgage broker in the UK is being invited to attend roadshows by the regulator about the risks they need to identify within their businesses, which The Alliance of IFAs (ALIFA) compliance expert Dale Thornley strongly recommends they should attend.
The roadshows will be followed by a two hour meeting or phone conversation about the firms’ risk management, or an online questionnaire. These have already taken place in Scotland, Northern Ireland and the North of England, and now the FCA is turning its spotlight on London and the South East.
According to Thornley, the interviews or online questions are focused on risk management as an evolution of treating customers fairly (TCF) rules.
The FCA will focus on the controls, culture and governance at a firm, he said.
For controls, advisers will need to demonstrate what processes they have in place, including their terms and conditions, management information and supervision protocols, Thornley said.
In terms of culture, the FCA will be looking at what values, behaviours and communications firms have embedded.
On governance, the focus is on structure, oversight and management, including decision making and accountability, according to Thornley.
Firms will be asked what they do and how they do it, and will be expected to recognise that understanding and evaluating all areas of risk is good business practice.
The FCA will attempt to establish how the firm identifies risk and whether controls are adequate, said Thornley.
Risk could include regulation, economic, competition and financial pressure, as well as risks associated with product providers and trail.
According to Thornley, the type of information the FCA is looking to establish includes whether an adviser can demonstrate that their business is run well, do they understand and evaluate the risks to their business, are their staff competent and regularly assessed and whether TCF is embedded into the business and if this is regularly reviewed.
