The Model Office Blog

The FCA and COVID19

[fa icon="calendar'] Apr 3, 2020 11:02:42 AM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAMR, MiFIDII, SMCR, Data, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII, Pandemic, COVID19, resilience

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With the on-going need for firms to continue to comply and compete, it’s worth focusing on the FCA measures and strategy taken to gain insight into what measures firms need to apply during these trying times:

Financial Resilience:

Operational resilience (we cover this in our next live webinar Thursday 9th April 14:00) is a key focus for the regulator and sits as one of the 8 main areas for regulation in its 19/20 business plan. Saying that it wants ‘firms to continue operating during this challenging  period’ the FCA confirmed it intends to ‘provide flexibility to regulated firms to ensure this’. Its expectations cover:

  • Firms that have been set capital and liquidity buffers should use them to support the continuation of the firm’s activities. 
  • Firms should plan ahead and ensure the sound management of their financial resources. This might include using government schemes designed to help firms through this period to meet debts as they fall due.
  • If a firm needs to exit the market, planning should consider how this can be done in an orderly way while taking steps to reduce the harm to consumers and the markets.

SM&CR Responsibilities:

The FCA do not require a single senior manager responsible for coronavirus response.

  • SMF24 operational resilience comes into focus
  • SMF1 or most relevant staff member need to take responsibilities for key workers

Dear CEO letter:

Oh yes we have another one, but a good one! Here the FCA want to address some long overdue issues some of which make complete sense for the retail investment advice sector;  

  • Flexibility across client identify verification;
    • Accept scanned documents (PDFs)
    • Accept client selfies or videos (Social media eat your heart out) We would add linked in profile to verify professional status
    • Due diligence on ‘other’s e.g. bank account provider, agreements to access data
    • Use commercial providers
    • Additional data to triangulate evidence such as IP addresses, phone numbers
    • Verification of email/ physical address via electron codes
    • Seek additional verification once self-isolation measures lifted
  • Flexibility over 10% depreciation notification (until end September) No action taken:
    • If firm has issues at least one notification within a current reporting period
    • If a firm provides general updates (which firms doesn’t?)
    • If a firm decides to stop reporting to professional clients only

So plenty of good stuff, firm’s will really benefit from such relaxation of measures but should ensure they’ve got their finger on the governance, risk and compliance pulse.

...Live Long and Prosper...Keep well and Healthy 

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Pandemic Planning Checklist

[fa icon="calendar'] Mar 27, 2020 10:19:05 AM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAMR, MiFIDII, SMCR, Data, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII, Pandemic, COVID19

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We hope you're going well as we finish the first lockdown working week. Last week we went live with our COVID19 risk management webinar which you can watch here. We produced a checklist that you can apply to your business to ensure you keep things ticking over through this Pandemic outbreak.
 
We hope you find it useful:
 
1. Ensure any i mpact is factored into the business strategy, roles and responsibilities and utilise RegTech to ensure you continue to comply and compete (Model Office's Financial Stress Test diagnostic is now available for free to help assess a firm's cashflow strengths)
2. Implement a p rocess on investment decisions and capital requirements
3. Put a c lient communication plan is in place and employ a triage strategy when engaging clients. Advisers can then contact the client and assess how best to help the client
4.  Once triage is completed engage clients through virtual technology such as Skype, Zoom, Join.me and running online reviews and meetings plus use FinTech applications such as Client Portals, Cash flow modelling or Robo-Advice 
5.  Develop content led syndication across social media, blogs, opinion pieces, video to re-assure clients
6.  Assess and understand your firm’s and client’s market exposure, hold regular board/invest committees
7.  Understand the impact on Business Insurance, Rates and assess Government support
8.  Work smart with staff working from home as necessary or developing shifts to minimise travel and personal interaction for staff and use webinar tech to hold team or conference meets
9.  If consultants or Non-Exec Directors are employed and an absolute necessity to have them attend your business premises, then their engagements need to be assessed and a view taken on whether they need to self isolate for 14 days before returning having visited other 'at risk' premises. 

...and Live Long and Prosper...Keep well and Healthy 

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Social distancing does not mean social isolation

[fa icon="calendar'] Mar 10, 2020 1:16:08 PM / by Chris Davies posted in Benchmark, compliance, client centric, Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAMR, MiFIDII, SMCR, Data, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII

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Having lived through Severe Acute Respiratory Syndrome (SARS) in Hong Kong I seem to have a deja vu with COVID-19 and social distancing upon us as we move towards a period of uncertainty where the most basic of human instincts, connecting face to face to learn and explore collaboration may be curtailed for a number of weeks or even months. We are running a webinar on this Friday 20th 11am which you can sign up for here 

So here are our thoughts on how to move forwards with composure, integrity and transparency.

The world we operate in is full of risks and risk management is a pre-requisite now for firms to survive and thrive and showcase professional practice. The FCA define risk as ‘the combination of impact (potential harm caused) and probability (likelihood of issue or event occurring)’.

 There are significant benefits to risk management:

  • Improve governance across compliance, conduct, competency
  • Increase the likelihood of achieving the organisation’s goals
  • Provide assurance and stakeholder confidence and trust
  • Establish a reliable basis for decision making and planning
  • Improve organisational resilience
  • Effectively allocate and use resources for risk treatment
  • Establish enhanced decision-making which in-turn will provide benefits by way of improvements in the efficiency of organisational operations, effectiveness of tactics (change processes) and the efficacy of the overall organisational strategy

Where a national and global health and financial challenge is concerned firms now should:

  • Focus on engaging their clients and re-assuring them that services and portfolios are risk assessed, managed and monitored
  • Re-assure staff and follow NHS guidance on cleanliness of premises and social distancing
  • Employ RegTech to ensure they identify, manage and monitor risks across the business plus using technology will minimise interpersonal interaction 

Once completed, firms can then better assess a way forward with their business and clients across:

  • Review a strategy for individual contact for example it could be wise to cease handshaking, keeping a distance and limit close social contact and ensure any staff or clients with a fever, cold or flu symptoms stay home. We’re advocating the Vulcan greeting; ‘Live Long and Prosper’
  • Ensure the principles of individual cleanliness are communicated such as hand washing and not touch your eyes, nose or mouth, plus read up on WHO Q&A
  • Design and employ a triage strategy when engaging clients to find out if a meeting is necessary or not. Advisers can then contact the client and assess how best to help the client 
  • Once triage is completed engage clients through virtual technology such as Skype, Zoom, Join.me and running online reviews and meetings plus use FinTech applications such as Client Portals, Cash flow modelling or Robo-Advice 
  • Develop content led syndication across social media, blogs, opinion pieces, video to re-assure clients
  • Work smart with staff working from home as necessary or developing shifts to minimise travel and personal interaction for staff and use webinar tech to hold team or conference meets.
  • Support home working by offering guidance around daily work routine and engagement, mental fatigue and anxiety management, support tools such as computers, cellphones and webex access
  • If consultants or Non-Exec Directors are employed then their engagements need to be assessed and a view taken on whether they need to self isolate for 14 days  before returning having visited other 'at risk' premises. 

Along with SARS, COVID-19 requires a sensible and practical strategy. Business as usual should continue until we hear otherwise, but by applying some tweaks to existing practice as above will provide re-assurance to your staff and your clients.

Live Long and Prosper...

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Retail Investment Adviser Benchmark Study 2020

[fa icon="calendar'] Mar 6, 2020 9:29:50 AM / by Chris Davies posted in Benchmark, compliance, client centric, Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAMR, MiFIDII, SMCR, Data, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII

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We have now launched our second bi-annual industry benchmark report which focuses on the key trends and challenges that retail investment advice firms face.

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Navigating a Hard Professional Indemnity Market

[fa icon="calendar'] Feb 13, 2020 4:09:12 PM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAMR, MiFIDII, SMCR, Data, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII, Endowment-theory

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The Financial Ombudsman’s compensation limit raise from £150,000 - £350,000 combined with a hard DB pension transfer driven Professional Indemnity Insurance (PII) Market and the December 2019 FSCS interim levy has created the perfect storm for stemming professional development within the industry. Many firms are lacking confidence in their ability to reinvest in their business and people development.

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Model Office, RegTech and The Endowment Effect

[fa icon="calendar'] Jan 28, 2020 11:13:49 AM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAWG, FAMR, MiFIDII, SMCR, Data, GDPR, Chatbot, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, Endowment-theory

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If we worked together in the same office and I offered to make  you a cup of coffee and presented you your own cup you have brought in from home or a clean office cup, which one would you choose? It’s pretty obvious you would choose your own cup, why? Because you own it off course, it’s yours! But it's just a coffee cup..

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Dear CEO

[fa icon="calendar'] Jan 22, 2020 2:46:41 PM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAWG, FAMR, MiFIDII, SMCR, Data, GDPR, Chatbot, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII

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So, the FCA start the new decade with a bang by writing to all Retail Investment Adviser firms with their latest directives surrounding regulatory concerns and risks…

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A Christmas Compliance Ghost Story

[fa icon="calendar'] Dec 19, 2019 4:50:33 PM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAWG, FAMR, MiFIDII, SMCR, Data, GDPR, Chatbot, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII

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The wind rattled the windows and the faint songs of carol singers could be heard as Ebenezer Scrooge huddled in his cold bed clutching a mug of hot water. “Bah Humbug” he exclaimed, “Christmas, a distraction from what is important…money and more money..” he barked to himself.

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Dealing with a hard PII market

[fa icon="calendar'] Dec 6, 2019 10:36:14 AM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAWG, FAMR, MiFIDII, SMCR, Data, GDPR, Chatbot, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD, PII

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With nearly 300 financial advice firms telling the FCA their professional Indemnity Insurance (PII) cover for claims was non-compliant post the Financial Ombudsman Service (FOS) limit rise from £150,000 to £350,000 and reports of 300%+ increases in PII premiums post FCA DB pension transfer directives means the industry is now facing a real dilemma.

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The Future of Regulation

[fa icon="calendar'] Nov 22, 2019 10:34:13 AM / by Chris Davies posted in Financial regulation, Financial business development, fintech, regtech, Risk management, practice management, FCA, advice, HMT, suitability, FAWG, FAMR, MiFIDII, SMCR, Data, GDPR, Chatbot, Culture, Enforcement, supervision, audit, Conduct, AI, Risk,, Accountability, Platforms, PROD, Product governance, digital,, Regulatory, Reporting, HRD

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The FCA termed RegTech as “…a subset of FinTech that focuses on technology that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities.” Simply put, RegTech can streamline compliance making it more effective and efficient plus provide tangible benefits such as cost and time savings.

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