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Best Practice Spring Update

Best Practice Spring Update. Learning Objectives. Review the most recent Compliance Updates and understand the changes and requirements Understand what action(s) need to be taken to meet these new requirements. Agenda. Technical Updates File Review Updates Updates Target Updates

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Best Practice Spring Update

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  1. Best Practice Spring Update

  2. Learning Objectives • Review the most recent Compliance Updates and understand the changes and requirements • Understand what action(s) need to be taken to meet these new requirements

  3. Agenda • Technical Updates • File Review Updates Updates • Target Updates • Partner Forums • Mortgage Market Review • On-going Advice Service

  4. Technical Updates-March 2014 New Projection Rates • Clients may query the projection values. • More may need to be contributed into pensions in order for individuals to reach their target income in retirement.

  5. File Review Updates-March 2014 • From 31st March we moved from 4 to 3 file review outcomes • FCA/ Our guidance has not changed • More in keeping with FCA terminology

  6. Client File Review Outcomes

  7. Target Nov 13 - Consumer Credit • The FCA has now taken over the control of the CCL, we now have a useful guide to help us, refer to this (APFA Consumer Credit Guide 2014). • If credit is involved the firm will need an A60B permission – (entering into regulated credit agreements)

  8. Target Nov 13- Enterprise Investment schemes • VCT & EIS excluded from NMPI regulations • VCT & EIS are Retail Investment Products (RIP)

  9. Target Nov 13- Financial Promotions • Excessive “jargon” • Font sizes too small • Unbalanced (pros and cons) • Social Media highlighted as “high” risk • Financial Promotion should be Balanced, Fair Clear and not misleading

  10. Target Dec 13-Dilution Levy • Growth in sales of Tracker funds (e.g. Vanguard) • Need to disclose this potential charge in Suitability Report

  11. Target Dec 13-Moving from Trail to AC • PS13/1 ban on cash rebates on platforms above £1 per month from April 2014… • … And between managers and platforms from April 2016 • Paradigm has provided a suggested process outlined fully within the Target bulletin

  12. Target Special - Bribery Act • Regulator highlighted risk from - Money Laundering, Bribery and Corruption • The regulator concluded that most firms had relatively well-developed arrangements • Paradigm C.O.I policy and Staff Declaration include references to the act • Further details in Target special Bribery Act

  13. Target Dec 13-CPD Reference Sources • CPD references for all RIPs • Training Needs Analysis – Study Aids document • Paradigm Compliance Manual (Chapter 7, Appendix 12b)

  14. Target Dec 13 - EIS & VCT Revisited • Further guidance provider by our strategic partner Ingenious Investments • The two articles together make a good CPD read

  15. Target Jan 13 - FSA/FCA Logo • Permission to use FSA logo will be revoked on 1st April 2014 • The FCA do not permit the use of their logo on stationery and/or financial promotions • Firms should have ensured that all stationery was updated before 1st April 2014.

  16. Target Jan 14-Event Diary

  17. Target Feb 14-Inducements and Conflicts of Interest Paradigm has provided a Conflict of Interest Policy to show that the firm has; • Identified any Conflicts of Interest • Shown how it discloses Conflict of interest • Shown how it manages Conflict of Interest

  18. Target March 14-Member Survey Gentle reminder Please take our survey…

  19. Target Mar 14-Incentive schemes The FCA considers incentive schemes to include…. • SE advisers remunerated proportionally via fees Firms required to • Review their remuneration strategy • Amend/ Update as required

  20. Target Mar 14-Incentive schemes Paradigm has highlighted the best practice; Offer balanced Incentive schemes Manage trigger point (where adviser may move from one band to another) Monitor spikes/ trends and changes in business

  21. Target Mar 14-Delivering Independent Advice FCA thematic reviews - TR 14-5 Were firms delivering independent advice?

  22. Target Mar 14-Delivering Independent Advice Poor Practice Advisers referring clients to other sources for a RIP Adoption of 1 WRAP with no Due Diligence Not managing AR effectively No guidance to advisers when a WRAP should or should not be used

  23. Target Mar 14-Delivering Independent Advice Good Practice Use of Panels from WOM research Use of specialist to sign off certain RIP cases

  24. Target Mar 14- Delivering Independent Advice Paradigm Top Tips Use pre-sale or ad hoc file review service if there is no specialist Consider the RIP Matrix http://www.thefinancesuperstore.com/ More top tips in the article itself

  25. Partner Forums-Due Diligence • Paradigm have issued Due Diligence pack • DD template Questions for, e.g., DFM, a third party risk profiler, wraps • FCA guidance; one minute guide.

  26. Non Mainstream Pooled Investments • In January 2014 the rules changed • COBS 4.12 tightened the circumstances under which a NMPI can be promoted • An additional requirement is that all recommendations must be signed off by senior management and that sign off must be recorded.

  27. Other Changes - Non Mainstream Pooled Investments A NMPI is any of the following investments: • a unit in an unregulated collective investment scheme; • a unit in a qualified investor scheme; • a security issued by a special purpose vehicle, other than an excluded security; • a traded life policy investment;

  28. Thematic Review TR 14/6 • Look out for updated guidance and podcasts following the latest regulatory review

  29. Mortgage Market Review (26th April) • Execution-only policy must be in place, not for…… • Vulnerable customers (debt consolidation, equity release, sale and rent back and RTB)…………(TIR) • Firms can now have an IDD or Client Agreement • Paradigm have issued regular MMR updates, Chap3b

  30. On-Going Advice Service Paradigm believe that the FCA will be showing a great interested in how firms will record and evidence that each client promised an on-going service is actually receiving what was agreed

  31. On-Going Advice Service • How is/are service proposition(s) disclosed and agreed with the client • What process the firm uses to monitor each review • How the firm evidences the on-going service agreed • Who reviews this and what actions are taken as a result of the outcomes

  32. Summary Learning Objectives We have reviewed; • Key Compliance changes since November 2013 • Highlighted what actions need to be undertaken to address these changes

  33. Thank You

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