Q&A

Question: Do directors have any duty to monitor the post coming into broking firms? If so, what do they need to do?

The FSA says:There is no explicit requirement in our rules that directors should monitor post coming into broking firms. However, Principle 3 of our Principles for Business requires firms to take reasonable care to organise and control their affairs responsibly and effectively. This principle is expanded in our senior management arrangements, located in the Systems and Controls source book (SYSC), which sets out what we expect of firms, in practice, when they comply with Principle 3. SYSC puts the onus on senior management to take responsibility for the control of their firm's activities and compliance with our rules. For example, among other things, it requires a firm to have:

Clearly defined organisational arrangements that reflect the nature, scale and complexity of the business

Appropriate segregation of duties to reduce the likelihood of mismanagement and fraud

Systems and controls to enable it to satisfy itself of the suitability of anyone who acts for it

Appropriate systems and controls in place to satisfy itself as to the suitability of its staff, including the competency and honesty of such staff.

More specifically, in relation to the handling of post, if the firm is expecting to receive something important in the post, it should take particular steps to look out for that item. For example, legal proceedings may be pending, or happening, with time critical dates or there may be money laundering suspicions. In such circumstances, the directors, or any one director with collective responsibility for the firm, should ensure that special steps are taken if appropriate. If a firm is in doubt, it should seek professional advice.