The amendments affect nearly all Principles of the Codes and we highlight below the key considerations and changes which may affect regulated firms.
What firms need to consider:
Are policies and procedures up to date? The amended Codes will have an impact on your policies and procedures, as well as your Compliance Monitoring Programme (“CMP”). Your procedures and CMP need to be mapped against changes in the Codes to ensure your compliance arrangements and controls reflect the new requirements. For example, Principal 3 introduces new monitoring and reporting requirements for complaints and Principal 2 requires adequate recording of conflicts of interest.
Are your contractual arrangements, terms of business and marketing materials adequate? Certain suitability requirements are being introduced which may impact your terms of business and the requirement to include all appropriate information relevant to the service being provided (Principles 2 and 4 of the Investment Business Code of Practice).
Is the Compliance Officer role appropriately defined in job descriptions? Principle 3 includes more detailed requirements regarding the responsibilities of the Compliance Officer, specifically regarding skills and experience, as well as reporting requirements.
Are adequate record keeping arrangements in place? Firms need a clearly documented policy and procedure for record retention including periodic review and testing. Principle 3 also imposes specific requirements for business, fund and client records.
Is there sufficient reporting to senior management and the board? Does the compliance function have adequate time and resource to discharge its responsibilities? Principle 3 requires the compliance officer to provide regular written reports in respect of a firm’s compliance with relevant legislation and the Codes of Practice. The compliance function must also have sufficient time and resource to conduct a range of activities including monitoring, risk management and on-going review and update of systems and controls.
How can we help?
Kinetic Partners’ compliance specialists have extensive experience of working on a local or cross border basis within fiduciary firms, wealth managers, investment banks, brokers and asset managers. The team includes former regulators, expert industry practitioners and qualified audit staff who have wide-ranging experience of various regulatory matters.