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 www.mlro.net.
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.