REGULATION
Why principles-based equals
compliance challenge
There are still plenty of brokers with gaps in their knowledge of the FSA’s
argue that their staff are
competent and know what
requirements as Terence Clark, senior consultant with RWA Associates, explains
they are doing, but can they
evidence this as required by
move away from a many regulator. Equally I see many
the FSA?
A
s a compliance
consultant, I am in hundred page rule book to a others who are struggling, not
regular contact with regime which looks at because of any unwillingness
the whole range of general outcomes and is very much to engage with the regulatory
insurance brokers, from the principles-based, so, in theory process, simply arising from
A
ll firms should have a
robust Training &
Competence Plan which
large multi-sited firm to the allowing each firm a certain the fact that they are busy
small local community broker degree of freedom in being brokers and dealing
with just one or two staff. interpretation and application, with the demands and needs
They all face specific, getting away from the one of various clients.
sometimes unique challenges size fits all approach that was The other part of this
to their business, but they are previously employed. This does problem, is that with so many
bound together by the not mean that there are no rules and regulations
common thread that they all rules, far from it, but it now surrounding running a
have regulatory allows the broker to deal with business, many brokers are not
responsibilities via the FSA. the FSA requirements in a familiar with the full
We are all aware of the more pragmatic way. requirements of the FSA rule
plethora of rules that each book. While most are aware of
firm has to deal with, no Therein lies the the main requirements, the
matter what their size or type regulatory challenge! devil, as often is the case, is
of client and these rules apply All regulated broking in the detail and this is where
equally to the largest firms do need to be able to many firms fall short, and
multinational broker or the evidence certain processes and where engaging the services
local ‘one man band’. polices for their firm even in of a specialist consultancy can
We have seen the FSA the new world of principles- pay dividends.
based regulation. Key areas As I visit my broker
such as Training & clients around the UK, I am
Competence, Treating seeing a pattern emerging,
Customers Fairly, Client Money where certain areas are well
Handling and Conflicts of managed and others, while the
Interest all fall into this basics are in position, do need
category and let us not forget some more work.
the day to day processes such Let me give some
as new business, renewals and examples to illustrate this.
claims handling, for which all Training & Competence is
firms must have written a matter being watched
procedures closely by the FSA and is a
On my travels, I come fundamental element of the
Terence Clark
across many firms who are Treating Customers Fairly
Senior Consultant
doing a good job in trying to (TCF) principles. I think most
RWA Associates
cope with the demands of the brokers would quite rightly
22 Insurance Brokers’ Monthly
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