Walker Marches On

Few in financial services will be unaware of the recommendations of the Walker Report, and the parallel developments in the Financial Reporting Council’s Combined Code.

The focus of these initiatives on banks, systemically important financial institutions and on listed companies might leave one wondering where these initiatives left those firms not in one of these categories.

Our advice to clients has consistently been that they should at least be aware of the Walker “steps”. We have heard of applicants for individual registration being asked by FCA how they intend to implement the recommendations at their firms – even though those firms were formally outside the Walker scope.

FCA intend to consult formally on governance issues in the first quarter – this will be the first public opportunity to see how FCA expects the rest of the regulated community to respond to Walker. Our expectation is that most of the recommendations will become best practice guidelines for all FCA firms.

We have been working with existing clients to ensure that they can react positively to any FCA query on these matters, including consideration of appropriate benchmarks. Contact us if you would like to discuss your own governance arrangements, and how they might be enhanced in response to Walker.

Retail Relief?

Retail advisers who have yet to attain a “level 4 qualification” might have breathed a sigh of relief when FCA published its latest RDR Consultation in December.

Recognising that their previous proposals lacked flexibility, FCA conceded that they need greater variety in methods of alternative assessment, aside from exams.

But whilst the requirement to set pen to paper in an exam hall may no longer be mandatory, FCA’s requirements for alternative assessment are rigorous. Set criteria must be met, and FCA go out of their way to state that “these assessments should not be seen as a guaranteed or easy option.”

Our advice to retail advisers in this position remains as it was previously – take the exam now. At least you know what you’re dealing with, rather than waiting for the form of these rigorous alternatives to emerge.

On a wider basis, firms and advisers who are not currently members of a professional body should be thinking of becoming one in short order. Firms and individuals who do so will benefit from and assumption in FCA’s proposed new rules that such membership is evidence of their having met FCA’s requirements for attaining and maintaining technical competence.

The alternative would be to set up an equivalent in-house scheme and pay for external confirmation. This can only be a realistic option for the largest firm.

Fulcrum Compliance are close to developments in this area and are happy to advise on how best to position your firm.

Liquidity

The first elements of FCA’s new liquidity policy came into effect on 1st December 2009.

Unlike the quantitative elements of the Policy due to be phased in over 2010, these “qualitative” elements apply to all BIPRU firms – including investment businesses. As at implementation date, all relevant firms are required to have a liquidity policy in place.

Non-banks might be forgiven for putting this one on the back burner, thinking that it doesn’t really apply to them. Indeed this impression is sufficiently widespread for FCA to be considering – so we understand – a “Dear CEO” letter in early 2010, asking firms to confirm their compliance with the new rules.

They might follow this up with themed visits to non-relationship managed firms.

Fulcrum Compliance has been working with clients to ensure that they have a workable, practical liquidity policy in place. Contact us for further details.

Monitoring

Busy Compliance Departments might benefit from outsourcing the routine monitoring which they carry out. This is often time-consuming and labour intensive and is often the first thing to be deferred when other tasks are pressing.

Yet it is this routine work that is vital to showing both the ongoing oversight of the firm, and that the Compliance Department works in a structured, ordered manner. This monitoring, when put before an ARROW team, will show them that oversight is constant, routine and risk-focussed.

Fulcrum Compliance is able to offer such a service, allowing you to concentrate on longer-term issues which require greater management input. FC can work to your programme, or agree a new monitoring programme to your requirements.

The Standard Compliance Department

Fulcrum Compliance is closely monitoring industry developments that may lead to a nationally recognised set of standards for Compliance Departments.

These are currently being drawn up by representatives of trade and professional bodies. We are thus ideally placed to advise you on how your own department might measure up. Contact us for details.

Training

With 2010 now upon us, firms will be considering the training they need to provide for their staff in order to meet in-house or external competency requirements.

2009 saw what must have been some of the most significant regulatory developments in recent memory, and Fulcrum Compliance will be able to provide client staff with a summary of the key changes. Contact us for details.