Choosing the person responsible for compliance in a firm can be difficult. Waltham Pitglow suggests a route to harmony

Subjects for review when considering a compliance strategy

Risk management
HR and training
Binding agreements
Business plan
Terms of business
Controlled functions
Systems & controls
Supervision & monitoring
Client monies
Delegated authorities
Fact finds
Internet trading
Approved persons
Training & competence
Business sources
Strategic plan
FSA reporting
Demands and needs
Advertising & promotion
Information technology

Here's a conundrum. Does a compliance officer have to be technically competent in relation to insurance products and market principles and practice?

Look at the underlying problem that this question presents if we consider someone who is managing the compliance function in a regulated firm and who knows very little about market principles and practice?

A compliance manager might know and understand everything there is to know about the subject of compliance, but is that person competent if he cannot apply the knowledge and understanding in the right way within a broking firm?

Clearly the answer is subjective to the extent that it will change according to the circumstances of the appointment. But the learning point is an important one.

If you are a firm about to make a decision as to who might manage the process of authorisation, you need to take time to think carefully about the competencies that will be required.

I have heard many horror stories of brokers who have retained the services of experienced compliance people - mainly from the financial services world - who have had no real knowledge of the general insurance business and have not fitted in.

Equally, those brokers who have appointed compliance 'champions' who have fully understood general insurance business but have been rather lost when it comes to compliance. At either end of the scale, the result is less than healthy.

About a year ago I had the pleasure of watching a provincial broking firm in the South West beginning the process of preparing for FSA regulation and had, without any real prompting, adopted a team approach to the process.

Indeed, it had selected one of the four directors as the compliance manager to project manage the exercise, but in the same way that they ran their business, so they ran the 'getting compliant' project. Working as a team and supporting each other, sharing the load, and each taking personal responsibility for studying and understanding what the FSA would require of them.

This is in stark contrast to the many firms I come across where responsibility for compliance is foisted unceremoniously on one director by the others. They then merrily blunder on in their business ventures leaving sad director with mountains of CPs and conduct of business rules to wade through with those cheery words "you look after it", ringing in his ears.

How many readers are sitting there nodding in agreement as their pleas for help and funding fall on deaf ears. Many hundreds is my guess.

The truth is that if one is going to draw up a job spec with competencies for a compliance manager working in isolation with no help or assistance or teamwork, you might be wise to insist that they wear their underpants on the outside of their clothing and keep them well away from kryptonite.

Project manager
So, learning point number two is that while the person responsible for compliance may well be the 'project manager' with the job of reporting to the FSA, the system only really works well if the whole board/all partners 'buy into' and get involved with the process.

In the same way that I have posed the question, "can you have a competent compliance manager who knows nothing about market principles and practice," so I fire the contrary; "can you have a competent practitioner who knows nothing about compliance?"

Learning point three relates to the task list that you are going to present to you compliance manager to project manage on the route to authorisation.

The FSA consultation papers are, in my opinion, well written. But that does not mean that you have to feel ashamed if, after 25 years of broking, you suddenly find yourself as compliance manager and it initially seems confusing.

The table above refers to a non-exhaustive (although very comprehensive) list of subjects that will need to be addressed.

And if that does not indicate the need for team effort then what does, I ask?

Two very interesting pieces of news this week.

You may have heard of the Financial Services National Training Organisation which is now called the Sector Skills Council.

Do not worry too much about names, but a number of key FSA training and competence specialists have become involved with the council. One of the major developments is the launch of special membership for smaller firms.

I am arranging a interview with them, but the long and the short of it is that the government backed council is a fantastic source of assistance for T&C matters for regulated firms and I will report back with full details in a week or so.

The second piece of news is that Biba's brokerASSESS has a sliding scale of entry prices to reflect the gradual population of the site over the first year and the first increment came in on 1 October.

However, Pitglow has been doing his sums and reckons that if you sign up in the next three months (before the next trigger date, 31 December) you'll get about 90% of the material for three months and 100% for the next nine months for 75% of the normal annual fee. Considering that a 14 day free trial is available, I reckon it is worth getting in early for a trial.

Next week is MOT week and we will be going for another online option.

  • Waltham Pitglow is an independent training and compliance consultant
  • RWA website
  • Using this CPD page
    For the vast majority of practitioners and indeed support and supervisory staff in our industry, CPD is about regular learning and study that is planned, recorded, timed and evaluated.

    If you are a member of a professional body with a CPD requirement then there will be certain rules regarding the quality and nature of study material, and the way in which it is recorded.

    For staff of GISC members this means recording on your individual training file what the learning was, who provided it and when.

    It might be structured, such as a course, a learning programme or exam study. But it can be unstructured. This form of study encompasses reading the trade press, technical material or taking part in activities to support your professional body.

    Some CPD requirements are points related (a little antiquated) and others require a time value to be allocated.

    For example, it might take one hour to read Insurance Times each week. Most of that could be put as a time value but, in reality, perhaps only an half hour was devoted to learning something. The rule is to be honest with yourself and record the time that is relevant.

    Always take time to make a note of what you felt you gained from the activity. This is useful information for anyone else considering the same activity.

    In response to the popularity of our CPD programme each week's CPD page can now be downloaded from our website.

    To download a PDF of this article as it appears in the magazine click here .