The FCA has a focus on S166 for Stockbrokers and Investment Managers. What can we learn?

The Financial Conduct Authority (FCA) has a focus on S166 for Stockbrokers and Investment Managers.

Over the last six months, several Stockbrokers and Investment Managers have been issued S166 Requirement Notices mandating the appointment of a Skilled Person.

As a result of the S166 requirements, Avyse Partners [AP] has recently completed four financial crime Skilled Person reviews in this sector.

Consequently, AP has unparalleled insight into these firms' current financial crime compliance challenges and

• Issued the attached report
• Also found here https://shorturl.at/aS219

The AP report highlights the fact the AP S166 reviews show firms are still getting the basics wrong:

1. Organisations have longstanding
1. Financial crime framework deficiencies that have not been adequately addressed.
2. Senior management either
1. Lacks sufficient oversight of risks and control weaknesses or
2. Where oversight exists, it’s not evidenced correctly or documented.
3. Firms are not
1. Documenting their policies and procedures,
2. Monitoring those policies and procedures as they should be.

AP has produced a report to share these observations as follows.

• The geneses of the four reviews AP conducted were visits from the FCA for different reasons. For example, triggered by
  • Responses to surveys or data returns,
  • A regular visit, or
  • Known exposure to a third party (intermediary/custodian) in common.
• Across the Firm's AP reviewed,

• The FCA had identified issues which were deemed so severe (because they had taken so long to be identified or addressed) that all four Firms were invited to
• Apply Voluntary Requirements (VREQ)
• Before the issuance of a S166 Draft Requirement Notice (DRN).

• The impact of a VREQ can’t be underestimated.

• It will hurt a Firm’s bottom line and damage its reputation.
• Furthermore, it can be imposed before a Skilled Person review, meaning it will remain in place at least until the review is complete and possibly for much longer.

• Below

• AP have explored the triggers of the four reviews and the areas the FCA are particularly interested in.
• AP has highlighted some key questions to ask yourselves to help you get on the front foot to be ready if (or when) the regulator comes knocking

Source =

Avyse Partners https://www.avyse.co.uk/ -

https://shorturl.at/aS219

Report also attached

https://www.comsuregroup.com/media/lsenolui/s166-ayse-partners-report-on-stockbrokers-others.pdf