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Clearing up compliance

Q: In view of the fine imposed on a high-street bank for breaches of

money laundering regulations, how can we be sure that we are doing

all that we need to?

A: Apart from the obvious requirement to verify client identity and

keep appropriate evidence, there are some additional requirements

that you need to comply with:

l Relevant staff must receive appropriate training. Cost-effective

training packages can be obtained from a number of sources. One that

we have used can be found at

l Firms must make use of national and international findings on

material deficiencies. Undertaking a regular review of the FSA

website will enable you to find out if there are

any money laundering findings relative to your business. In addition,

last month the

FSA published the results of its money laundering theme work for

small firms which

provides a useful pointer to areas that you should have particular regard to.

l The money laundering reporting officer must make an annual report

of activity that has been undertaken. This can be sat-

isfied by keeping an annual record of training, a report recording

any suspicious transactions, changes to procedures and rel- evant FSA

publications/reports that have been received.

Q: Our mortgage business will need to become FSA-regulated in October

2004. When should we apply to the

FSA for authorisation?

A: We are advising clients to aim for January 2004 at the latest in

order to get to the front of the queue as there will be 35,000 other

firms also applying for authorisation. In the meantime, you need to

start examining your business in order to identify the work required

in designing and building the infrastructure that will be required to

ensure that you satisfy the FSA requirements for senior management

systems and controls, conduct of business and other key areas of

the FSA handbook.

The key is to start the planning process now to identify the areas

where new processes or procedures are required and then introduce

them gradually. A regular check on the FSA website under handbook

development will enable you to track FSA announcements on mortgage

regulation which will enable you to plan accordingly.

Take time now to formulate the individual responsibilities within your firm and

you should have sufficient time to plan any necessary changes. For

example, your stationery will need to change to show your new

authorised status. Steps like these should ensure that your flight

path to Mortgage Day will have a soft landing.

Q: We have received an endowment complaint for a policy sold in

January 1988. Do we have to deal with it in accordance with the FSA


A: The simplest answer to this is no. As the sale was before the

Financial Services Act 1986 came into force (April 1988), you do not

have to comply with the FSA requirements. In short, you can inform

the complainant of this and their only recourse would be to pursue

you through the courts if they felt their claim warranted this.

Q: We have recently received a number of endowment complaints. Is

there any specific way we should handle them?

A: First and foremost, you should notify each complaint to your PI

insurers and follow any instructions they issue. As the amounts

involved are usually well below any policy excess, your insurers

should expect you to review and respond to each complainant.

A complaint review must be carried out

by someone other than the adviser invol-

ved in the sale. Remember that it is entirely acceptable to have an

external review of

the case performed by someone skilled in

the compliance area who is familiar with

handling such cases. Given the large number of complaints that are

now being rec-eived, it is important to ensure the cases are handled

properly to ensure that only valid non-compliant complaints receive


If redress is considered appropriate, you should follow the guidance

under appendix 2 of the FSA DISP sourcebook to calculate the amount.

Do not forget to include these complaints on your next return to the

FSA, due to be submitted by the end of April.


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