View more on these topics

Inside Edge

N2 is less than a month away. N3 and mortgage regulation follow next year and, who knows, maybe N4, 5 and 6. Therefore, IFAs are currently facing a bigger compliance burden than ever before.

In theory, N2 creates a single statutory regulator for the financial services industry. However, in reality, there are many others, including some self-regulatory organisations, that have their own codes of practice.

As Corey Boles quite rightly pointed out in last week&#39s Money Marketing, although these organisations operate on a voluntary basis, for most IFAs, the prospect of being named and shamed ensures adherence to their standards.

I am confident that the compliance burden will not shrink as a result of N2 and I also bel-ieve costs will increase. If anything, compliance is going to become an increasingly laborious part of an IFA&#39s job. With this in mind, IFAs should be looking at ways to reduce the time they have to spend on compliance issues while still maintaining the professional and regulatory standards required of them.

Technology is helping IFAs save time in many areas of their business process and compliance is no different. It can rem-ove the traditional paperbased admin burden associated with compliance, freeing up time and resources for IFAs to get on with building their business. The cost of spending time on compliance rather than with customers is a major issue for all IFAs.

However, a survey of 200 IFAs carried out at one of our recent technology seminars shows that IFAs are not taking full advantage of technology when it comes to compliance.

On a more positive note, there are many areas where technology is being indirectly used for compliance purposes. The FSA Conduct of Business sourcebook stipulates the requirement for a suitability letter giving evidence that the IFA has carried out a full review of all the products and providers in the market.

For rate-driven products, this requirement can be met by sourcing a comparative quote from The Exchange. For more feature-driven products, there are a number of electronic research tools that enable IFAs to carry out more detailed research on specific products.

These are just two examples. There are many other aspects of technology that help IFAs meet regulatory requirements or voluntary codes such as mortgage sourcing systems complying with the mortgage code.

The next stage is to build compliance deeper into the sales admin process. The end-to-end sales admin systems being developed for IFAs at the moment have integral compliance procedures. This will automate many of the compliance requirements that IFAs currently have to meet. Workflows and alerts will identify outstanding tasks and ensure nothing is forgotten.

Under N2, senior managers face strict personal accountability measures. Managers can be suspended, fined or terminated if something goes wrong. A whole section of the rulebook is devoted to this issue. An end-to-end sales admin system allows them to easily monitor the progress of tasks and access data for management reports.

The nature of the financial services industry means compliance is always going to be a big issue. Having been a regulator and terminated over 1,000 firms as well as being subjected to a £250,000 fine, I have seen this from both sides and know the reality of regulation. We need to embrace this issue and make sure that IFAs have the necessary tools to meet the requirements of the regulator while still having time to run and develop their businesses.

Jim Gaskin is managing director of The Exchange


IMG publishes professional introducer guide

The Insurance Marketing Department, a consultancy for intermediaries and product providers, has produced guide for IFAs on “Working with professional introducers.”This is designed to help IFAs develop business relationships with accountants and solicitors after N2 on November 30.IMD director Stephen Phillips says: “As pressure grows to achieve increased productivity – especially for those wishing to […]

Product matters

Twelve months ago, Scottish Provident stood alone in the “menu-based” flexible protection market but over the last year four others have entered.The added competition can only be good news as insurers play catch-up or pass Scottish Provident.The recent enhancements made by Friends Provident echo what is already available elsewhere, with one exception – personal pension […]

Octopus Asset Management – Bioscience VCT

Thursday, November 8, 2001.Aim: Growth by investing in listed and unlisted biosciencecompanies.Minimum investment: Lump sum £3,000.Opening-closing date: October 15, 2001-April 5, 2002 for 2001/2002tax year, April 12, 2002 for 2002/2003 tax year.Charges: Initial 5 per cent, annual 1.25 per cent.Commission: Initial 2.25 per cent, renewal 0.25-0.4 per cent for firstfour years.Tel: 0800 2792501.

Torquil Clark produces guide to pension charges

Torquil Clark has produced an investors guide to pension charges covering the main types of charges used by pension companies and guidance on how to get the most out of your pension plan. The IFA says over the last 15 years, the difference between the best and the worst fund performance including charges was a […]

2016 Global Survey of Individual Investors: How is investor behaviour rewriting the job description for financial professionals?

Trapped between expectations for near double-digit returns and strong apprehensions about investing in persistently volatile markets, investors worldwide are of the opinion that professional financial advice is worth the fee. But even though they believe individuals who work with a financial professional are more likely to achieve their goals, investors have a clear vision of […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm