On the other hand, there are a number of telltale signs that are sure to create a bad impression of your company’s standards; for example, poorly structured reports that are full of unedited, irrelevant standard paragraphs and risk warnings that contain typos and bad grammar do not demonstrate a commitment to clarity and transparency.
Crucially, sub-par suitability reports make it difficult for an external reviewer to understand what you are recommending to a client and why – the cornerstone of any financial advice company.
What else might an independent regulatory specialist notice when reading your client files? Ask yourself:
• Are your fees disclosed clearly and compliantly?
• Is there an ex-ante aggregated costs and charges disclosure for new clients taken on post-Mifid II?
• If a client file contains evidence of client dissatisfaction, is that reflected in your complaints register?
All these things can be indicators of the general attitude towards compliance and clients at your company.
Compliance control framework
If your firm is taken over, the chances are that you would use the acquiring company’s compliance-related policies and procedures.
Arguably, the state that your current control framework is in should not matter too much.
Nevertheless, we would usually take a look at some of the basic controls you would expect to see in an advice company in order to assess how seriously you take your regulatory obligations.
With that in mind, there are a few things you can check to prepare for an independent reviewer:
• What would they make of your financial promotions register and sign-off process, and are you confident that your website and client-facing literature is compliant?
• What would they make of your complaint handling and conflicts of interest registers and procedures?
• What would they make of your compliance monitoring programme, and associated management information, which shows: a) that you (or the external compliance specialist you use) are regularly doing the monitoring; and b) what actions you are taking to address any failings identified?
• What would they make of your training and competence records for your financial advisers, including whether advisers specialising in certain areas are doing continuing professional development and keeping their technical knowledge up to date?
If you have not done so recently, consider asking an independent regulatory specialist to give you a compliance health check before you put your business up for sale.
Attitude towards clients
When we conduct regulatory due diligence, we always make a point of interviewing the key individuals in the target company who are responsible for the direction of the business and the compliance arrangements.