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Adviser toolkit: Compliance support

Last month we started to consider some aspects of decision-making around regulatory authorisation. Many people will offer advice on which route to take. My first, and potentially most important, piece of advice is to consider the vested interests of those who advise you.

When I set up my own practice, the key factors were around compliance. I had a strong background in understanding the requirements as they applied to advice and suitability. Compliance support, while useful, didn’t release me from responsibilities for compliance and I preferred to be accountable for my own mistakes. And it was more economical to do it myself than pay someone else.

In addition, the commission share model didn’t work well with my own fee structures and, as part of a network, where your success is so closely affected by that of other members, I did not want my business to be vulnerable to the mistakes of other firms.

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I am not saying these are right; I know many will argue the opposite. The regulatory environment has changed dramatically in recent years, and the ability to delegate RMAR data submission, complaint handling, CPD supervision, professional indemnity broking, case review and due diligence to your network principal is now seen by many to be hugely valuable.

On the other hand, many other firms have gone through upheavals as their networks have closed, making it difficult to transfer clients, business and income to new firms.

Networks, support service providers and compliance consultants will each have reasons for their route appearing most preferable.

Below are some questions you may wish to ask yourself before making this decision. It’s also worth asking other members of your team – or even clients – to see what skills and experience they have which could help you with your compliance responsibilities.

Over the years, this discussion has been played out many ways. The debate is usually most strident when a network fails or when significant regulatory upheaval causes firms to question whether their own interests are best served by trading independently or by being part of a network.

This decision will be hugely personal and hugely important. Make sure your choice is made for the right reasons and for the best interests of you and your business.

Questions to ask yourself

1. Do you already have a good understanding of compliance and regulatory requirements?

2. Are you familiar with the FCA Handbook, rather than others’ interpretation of it?

3. Do you know how to access the vast quantity of material that the FCA publishes to assist small firms with their compliance?

4. Are you a strong administrator or is paperwork not your strong suit?

5. Do you use a comprehensive back office software system, or is everything kept on paper?

6. Do you attend regulatory update sessions at professional conferences, or focus on sales presentations?

7. Do you consider that your current employer has good systems and fairly represents compliance requirements, or does compliance feel onerous?

8. Do you keep CPD records up to date, or do you only write things down when your accredited body asks for evidence of your annual CPD?