Sesame doubles case checking as FSA gets 'intensive'

Network giant Sesame is checking on average more than double the amount of new business compared to a year ago as it adapts to a “more intensive” regulatory environment.

The Friends Provident-owned company used to check about 15% of business written by its member firms but now reviews as much as 40%. Higher-risk cases, such as pension transfers, are checked more often.

Sesame makes clear it has upped its business checking procedures not as a result of FSA intervention, but to pre-empt more intrusive regulation and ensure a fairer outcome for consumers.

As part of the new arrangements, it has agreed an initial three-year deal for Redland Business Solutions to tailor its Insight T&C system for the network's 1,500 appointed representative firms.

That deal is part of a £2m investment in technology designed to help firms meet their compliance requirements and manage risk. Sesame expects the new IT platform to be up and running at the beginning of 2011.

Managing director for distribution Nick Kelly says while firm principals have welcomed the idea, it expects some individual advisers to voice their frustration.

"Some advisers might ask: ‘Why are they coming back to me about checking more business? Why are they looking for any niggles? It will be frustrating for them, but this is what the market is expecting nowadays."

However, Kelly says the move is not having an impact on the number of Sesame members. "Of all those firms leaving, 39% are leaving the industry for good. The trends are no different to what they have been over the last five years, including the recession. We are now a more robust regulatory business than we were two years ago."

According to Kelly, the new compliance platform will give firms a single view of their regulatory risks and performance, along with greater flexibility as to how and when they access important data.

Business checking has been at the forefront of firms' compliance agendas in recent months.

In January, Aegon-owned national IFA Positive Solutions introduced a new training and competence framework which included fresh business checking requirements for both new and existing partners.

In March, now-collapsed IFA national Park Row was censured by the FSA - and ordered to redress customers to the tune of £7.8m - for suitability of advice failings. It later emerged the company had reduced the number of cases it checked for compliance in 2008, despite multiple warnings from the FSA.