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David Shelton: How data can be used to manage compliance risks

There is a myth that huge amounts of data are required to monitor your business; that is not the case. You should concentrate on what is important and only look at the detail if you suspect a problem.


The FCA has expressed a strong desire for firms to develop and demonstrate effective governance. Much of this is related to management processes and good business practice, with one aspect linked to the accuracy of management information and how data is used.  

Many advice businesses have a wealth of information but do not have the resource to use it effectively. In addition, there is a myth that huge amounts of data are required to monitor your business; that is not the case. Many firms use the dashboard approach that deals with the headlines, with the option of getting into the detail if concerns arise.

To test the effectiveness of your management information process, answer the following questions:

  • Do you have a set of data that is informative and which you act upon?
  • Do you have data that is wider than sales figures and top line financial information?
  • Do you involve your senior team in reviewing the data?
  • Is the data reviewed on a regular basis?
  • Is the data collated properly and clearly presented?
  • Do your staff see the data and discuss it with you?
  • Can you drill down into the really important areas if you need to?
  • Does your management information pick up the key TCF measures as well as financial and sales data?

If you have answered yes to most of these, your data and, more importantly, the use of it is in good shape. If you are not in this position, you are in the majority but should recognise this may not be as large a task as it may seem. To make sure your management information process works well, you should:

  • Identify the data that is going to be useful and tell you something
  • Work out who will produce it and how frequently you need it
  • Link it to data collection for FCA returns and professional indemnity cover
  • Set clear targets for all data so you can monitor progress
  • Look for trends and compare over time or against industry benchmarks if they exist
  • Establish a specific point in your management meeting when the data is discussed
  • Make sure actions are documented and followed up. This is particularly important to evidence how well the business is being run
  • Share as much as possible with your staff.

Go with the numbers


The table above is the recommended dashboard which allows you to pick up a wide range of relevant management information within one collection and analysis process. If you tabulate this data to show year to date, you will have a good picture of the main operating areas of the business.

Much of this data will be available from your back-office system and many businesses use much of it to support their management of KPIs. There is an investment of time in setting this up and making sure someone takes responsibility for collating the data but it will pay you back many times over as it puts you in control.

David Shelton is the author of The Business of Advice book and website 


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