When the FSA comes knocking

The Financial Services Authority (FSA) will be dropping in to visit one in four of the firms under its charge and if the regulator does not come knocking this year, then management boards can expect not to be kept waiting long.

With the FSA doing the rounds, mortgage and insurance intermediaries have to understand their obligations, be confident they are meeting them and be able to demonstrate how they are doing it.

Independent audits have always provided a benchmark against which firms can measure their performance.

They also serve as invaluable management information tools and help firms tailor their future efforts to produce the best results.

Compliance and technology specialist MS2M is carrying out a major research programme involving some of the country’s largest mortgage and insurance providers at the moment.

By looking at intermediaries in their distribution chain and assessing how their operations stack up with the FSA’s regulations, firms will get an independent view of how compliant they are and gain a better understanding of where they need to improve and how they can go about it.

Not every firm in the market will be involved in this research, but there are online tools available to help any firm take a compliance snapshot of their own business and put it through a regulatory MOT.

This will flag up where problems exist, let intermediaries benchmark their own regulatory performance over time and become much more efficient at identifying and then closing potential breaches in compliance.

Such a proactive approach will drastically improve performance and act as a beacon highlighting a firm’s positive corporate intentions and efforts in this area. The FSA has talked a lot about the importance of firms being prepared to work with its staff when it comes to compliance.

However the regulator is also very keen to see its charges take up the challenge for themselves and work with other third parties that can help them operate effectively.

Equally product providers, who also have to prove their operations are compliant to the regulator, want to be able to show they are working with distributors that take regulatory management seriously.

Being compliant is no longer just about operating within the rules, but also about doing so in a way that is demonstrable and creates significant competitive advantage.

Creating an ongoing compliance benchmark is one way of doing this and will create commercial benefits far beyond simply helping a firm meet its mandatory obligations.

Julie Alderson is director of MS2M

The views expressed in this article are those of its author and do not necessarily represent those of the company he represents, IFAonline or any other Incisive Media affiliated organisation.