As part of our How To series on 'How to get FCA authorised'. We are addressing all aspects of preparing for FCA authorisation. This will look to cover a range of key items your business should consider from the location of offices, and expected fees to resourcing.
In our previous session, we covered:
This session, we will cover the first few key areas covering
systems and controls
fees and charges
If you would like further detail on an area covered, feel free to reach out to the team.
Systems and controls
Considering the size of your firm, staff, and location of staff you will need to detail how you assess and monitor staff compliance on an ongoing basis.
Your authorisation description will need to include how you conduct quality assurance, compliance checking, audit (internal/external) reviews, staff performance management, staff incentives, staff training and development, and what your disciplinary framework is.
Consider whether your controls are robust to mitigate the risks of financial crime and fraud and whether your team is sufficiently trained. Ask yourself, can you explain what is transaction monitoring in detail? Or any other financial crime control for that matter.
You will need evidence that you have a robust and appropriate control framework that sets out key risks and controls to mitigate these risks including process manuals, training, and senior management oversight.
You must provide an explanation of who are your target customers, who may be deemed vulnerable from that cohort, and how you will identify vulnerable consumers. You should consider breaking down by percentage the different distribution channels you may have.
You will need to ensure you have appropriate controls in place to deal with vulnerable consumers.
Fees and charges
The regulator wants to understand if your fees and charges can be considered excessive or if your terms and conditions are misleading. As an exercise, you should examine whether you have an array of charges that could be applied to a consumer, if so this could be deemed excessive. Remember you are trying to display to the regulator that your fees are reasonable and that the customer is fairly treated.
Provide a list of all the charges that apply to consumers and state why these charges may apply.
Would they affect consumers in a negative way?
How does this affect vulnerable consumers?
Is your literature (i.e. terms and conditions) clear and comprehensive about the charges?
Are your contract terms clear and fair to the consumer?
Are you charging the customer a fee due to you outsourcing a part of your service? E.g. credit broking
You must continuously review all of your financial promotional literature to ensure that all advertising is clear, fair, and not misleading. This will apply to your brochures, leaflets, websites, paid marketing, etc. Any advertising should clearly explain the benefits and risks of a consumer selecting your product.
You should also update your policies and procedures to ensure that vulnerable consumers are not being inappropriately targeted by any of your promotional campaigns.
As a reminder to you/the team
Financial promotions or adverts are likely to be the way consumers become aware of your financial services and products
They can take the form of a website, leaflet, social media post etc
The FCA sees financial promotions as a significant influencer of consumers’ decisions when selecting a product
If an advert breaches regulatory rules, you can be asked to withdraw or change the advert to comply with FCA requirements (brand damage may occur if this happens)
At MEMA we have helped a number of firms who have needed practical support reviewing their websites against FCA requirements in anticipation of authorisation.
Did you know that MEMA has created content on the above in the form of an ebook guide?
If you would like further detail on the FCA authorisations process, please reach out to the team.