The FSA are now progressing with their final round of ‘housekeeping’ before they are abolished and replaced by the FCA. The Regional Assessment Programme consists of Business Risk Awareness Workshops (BRAW) to which all small firms with retail clients will be invited, and then a follow-up regulatory review, called the Proactive Regulatory Review will be conducted with the firm.
The process started with firms from the North West being invited to BRAWs last month – with these due to take place in February. Brokers in the South West are now receiving invitations for BRAWs in March.
The purpose of the workshops is to give regulated firms a clear insight into the key messages of the regulatory review and, through case studies, to examine examples of good and bad practice. BRAWs are optional, however attendance is advised as there is likely to be some useful information to be gleaned which will be beneficial prior to the next stage.
Stage two will be a Regulatory Review. Much like TCF, this will either be a face-to-face interview, a telephone interview, or an online or paper-based assessment. The review will aim to look across the firm and measure the effectiveness of senior management in identifying and addressing risks and the controls in place. It will also look at the financial soundness of the firm and the ability to continue to provide products and services to customers. Feedback to the firm will follow at the end of the review process and will address both good and bad practices identified.
In stage three the FSA is planning to put in place a verification process whereby a selection of ‘good’ firms will have a half-day visit to verify the responses provided by the firm during the assessment process. A more thorough full day supervision visit will be made to firms identifed as potentially ‘bad’.
Some areas that the FSA are likely to focus on (which may not all be applicable to smaller firms) are:
- Procedures – the FSA will focus on the advice a firm gives, its decision making and its complaints (processes and handling).
- Monitoring - directors, advisers, staff and third parties to ensure policies and processes are being followed.
- Analysis - management information about products, advisers, financial issues and compliance issues.
- Quality Control & Checking - processes and procedures, controls, advice to customers, accounts and FSA reporting.
- Culture within the firm.
- Escalation processes.
- Remuneration policies for staff and services.
- Transparency of decision making.
- Accountability - clarity.
- Governance.
- Oversight of business and controls
For more information including the FSA's BRAW roadshow workbook see our document view page here use the dropdon to select the document.