Firms must now deliver on their promises, says John Quigley
In reality 14 January was a fairly normal Friday. Brokers for the most part carried on business as usual. No great fanfare or popping of corks (no more than usual!).
Behind the scenes many were doubtless busy ensuring that all the steps and measures they have implemented are on track and being effective. Many are confident that the steps they had taken were more than adequate and robust, but not entirely confident that the infusion of this alteration to culture had yet been fully achieved.
Others will have been unhappy with reports of extension of deadlines for those in the process but not yet authorised. Particularly the many who embraced the challenge at an early stage and spent considerable resources in achieving a structure that exceeds FSA minimum requirements within good time.
Some firms' compliance teams may also have been in considerable disarray as terms of business agreements with insurers remained outstanding, risk transfer not finalised and market bodies issued mixed and confusing messages. All the while practitioners wondered if they were breaking the law on their first day of FSA regulation.
After all this though the markets are still functioning and continue to trade day-to-day without interruption.
As anticipated, a number of small firms provincial firms and London market brokers did not make the cut. In London these seem to have been in hand in advance and either acquisitions or closures took place in such a way that clients' interests were looked after.
It will be interesting to hear more of what impact this has had elsewhere around the country and if and how many firms have policyholders without an immediate source of service available to them. It would be hoped that the insurance companies did take adequate steps to ensure that those that were unlikely to carry on trading had their affairs in order and that client premiums and claims monies are not at risk.
We already know that 'culture' is what all this is about. In the absence of what was viewed as an adequately robust pre-existing culture across a wide front in the industry the government/FSA has found it necessary to legislate that there shall be a culture and it shall be one embracing good corporate governance, individual and collective responsibility, honesty and fairness with clients, staff and markets, and application of professionalism and transparency throughout. In short, observance of best practice.
Firms now face the challenge of finding ways to cope with the administrative burden and cost of resources to implement, maintain and monitor these arrangements. A firm must be able to demonstrate to itself and its regulators that what they say is in place and is observed and understood by management and staff.
You will be tested at some time - do make sure that you follow through on your commitments and plans now.
Auditing your processes and compliance is essential. Do you know who the firm is dealing with as clients and producers? Until people become acclimatised to being asked these probing questions, before you have done your first piece of business, it may well be a bit painful making these inquiries as you try to build new relationships.
However, ask you must. One source of guidance on how to approach this professionally so as not to offend may be your law firm. The other key area is the function of HR. Not traditionally seen as a front line tool in the broking world, HR now has an important role to play in assisting management to ensure the team have the appropriate skills and ongoing development training.
How many firms already have an industry standard programme in place to assess and monitor individual competences, that identifies comparative skills and experience for varying roles and levels of seniority, and provides a clear development track for career progression of their staff?
How many also have a structured training programme in place easily accessible to all staff that provides a proposed programme of training to meet the needs of each individual and specialism?
These are just four areas to consider. For many firms the latter two will be ones where it makes economical and resourcing sense to outsource or retain external consultants. If not already in place you had better get this under way now.
Resist the temptation to relax, keep up the pressure and lead from the front. IT
' John Quigley works in risk and regulatory control at Loddon Consulting