Much can go wrong in a business, but by using group discussion on errors valuable lessons can be learned. Robin Wood explains
The first learning point this week relates to FSA regulation and applies particularly to those responsible in some way for compliance.
A number of delegates on recent compliance courses have brought to our attention offers from consultancy firms guaranteeing authorisation by using their services. There are three points here.
In the first place, only the FSA can guarantee authorisation and in the second, the final form has yet to be issued.
The third, and probably the most important, is that perhaps the guarantee of authorisation is not as valuable as it might first seem. On the basis that there are likely to be tens of thousands of applications for authorisation, the easiest way to reasonably ensure authorisation is to tell the FSA what it wants to hear.
It is fairly clear that there are cases where applicants to the GISC have been 'economical with the actuality' but is the FSA going to be other than firm with applicants who embellish to give a more FSA acceptable account of the manner in which they transact business than is actually the case?
The question to pose therefore is not "can you guarantee authorisation" but "can you reasonably ensure that I can truthfully tell the FSA at the point of authorisation that I will be compliant by January 2005." Even if a firm gains authorisation during 2004, the authorisation only has legal effect from January 2005.
We have a growing concern that brokers are being encouraged to adopt a view that authorisation is the deadline. It is not. The key learning point is that it is a process along the way that has a deadline, but the authorisation itself could be worthless if the key objective of compliance by the end of 2004 has not been not met.
One of the important aspects of work in the fields of negligence and compliance is that practitioners rarely find themselves in trouble. Much of this is good practice, but it is also a matter of good luck. Our experience is that many practitioners are non-compliant or negligent on a regular basis. But sometimes a rare combination of events results in a loss or circumstance that brings bad practice to light.
In the exercise below staff can be encouraged to think about what doing something wrong actually entails and its potential effect, such as a stressed and worried customer. It is bad for business and we know full well from our own dealings in today's commercial world just how stress and worry can effect us and in many case the person providing the service has no idea that we are being affected in this way. It is an important factor in the GISC/FSA culture.
Note also that a group discussion with recorded feedback turns it in to a useful exercise that can be lodged in ones individual learning file and referred to in the future. If you are facilitating such an exercise, do try to let staff use their imagination without being silly and do not forget that if it is well planned and managed, in most cases, this will count as structured CPD.
In a similar way, another exercise can be aimed at account executives dealing with commercial clients.
This can form part of an annual competence assessment. If you do not have a fact find that you use, you should now be thinking about designing one and incorporating the FSA's requirements when the final rules are issued. If you are a brokerASSESS member, there is a case study that considers how to construct a generic fact find and it is free as part of your subscription.
You will need to construct a hypothetical client. In reality, just go through your company files and copy the information, but be sure to change any information that could reasonably be identified to that client.
Give each appropriate member of staff sufficient time to complete a fact find that is wrong in a number of respects (say ten). Do not give any guidance other than the individual should relate wrong to. Take three areas where the system could break down, for example: regulator compliance; company compliance; and a potential PI claim. Here are a few examples of the type of breakdown:
The learning objective is very similar, that is, address the negative rather than the positive. Remember that a good feedback session is vital to reinforce learning points and for staff to share ideas.
You can use exactly the same exercise when looking at a dummy renewal or new business interview. Knowing what is good is important, but knowing what is bad is just as vital to true professional competence.
RW Associates. Email
ruy.lopez@brokercompliance.co.uk
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