Document check
The first step is a review of the firm's documentation. A list is sent in advance of a visit, and the firm is asked to supply the documents on the list that it has.
Promotional literature- the firm may have corporate brochures and product flyers. Next reprint will need to incorporate FSA or GISC logo Terms of business - if you haven't got one collect a few others from other brokers as a basis Samples of advertising - must comply with Advertising Standards Association (ASA) rules. FSA or GISC logo will need to be added to adverts for the future Company organisation chart - shows the reporting lines and structure of the company Procedures manual - this covers how staff should handle cash and cheques, quotations, renewals, claims, and general reception/switchboard duties Letterheads, business cards & other stationery - business cards and other staionery need to be reprinted removing obsolete logos and incorporating FSA or GISC logo Compliance policy - used alongside procedures manual Training & competence plan - see separate comments under training & competence section Sample training & CPD records - see separate comments under training & competence section Sample job description - tailored to each individual appointment Sample employment reference form - standard format, but may vary from person to person Sample staff application for employment form - standardising these forms makes it easier to collate staff experience and qualifications Company complaints procedure - many provincial firms have few complaints and deal with them promptly. Written procedures are a necessary part of current GISC codes Client information on complaints - this can be incorporated in the terms of business agreement. Also, an information sheet can be sent to any client who notifies a complaint Complaints log & control form - essential that it is kept up to date and available for inspection Information-gathering tools (for example, fact finds) - many firms have an extensive range of commercial fact finds and forms for submission of risks to underwriters General information given to clients at inception and renewal - at present renewal notices bear caveats regarding underinsurance and the duty of disclosure. The business agreement, when prepared, will be issued to all new and existing clients Client files - files should be kept in very good order. A4 telephone notepads can be introduced for uniformity. Scrap paper, or small (easy to lose) message pads should be avoided.Summary
Many firms are able to supply some, but not all, of the documentation on the list. The check reveals that there are a number of areas where some small steps can be taken to meet a regulator's requirements. And this will reflect in an improved quality in the day-to-day running of the firm's affairs, and reduce the chances of error.
Competence & training
Training and competence is probably the area where most brokers have a great deal of work to do. From both a compliance and a risk management aspect, a number of issues will need to be addressed.
Job specifications - the company needs to draw up specifications for the various types of job within the business Training needs analysis - this will enable the firm to establish the knowledge that employees have at present and what is needed to perform competently. The difference between the two will form the individual's training or learning needs Individual training files - once created, they will be used to record all learning undertaken by individuals Sources and types of learning - after the training needs analysis has been carried out, the firm will be in a position to consider the training that is required. From this, it can identify suitable sources, and create a learning budget. Examples are, courses offered by insurers and the in-house experience of senior staff. This has to done in a structured way Other training & competence matter - when the steps listed above have been taken, and a framework is in place, then the other component parts of the T&C scheme will follow. These will include assessment, obtaining learning materials, benchmarking against own standards, and training supervisory staff to ensure that the whole process runs smoothly.Summary
In a regulated environment, there needs to be a mechanism to demonstrate that everyone remains competent to do their job, including experienced staff.
Other compliance issues
The issues arising from the document check and the training plan highlight many of the areas where a company needs to take action. In this final section, we will look at other areas of compliance.
GISC code - the FSA has announced that due credit will be given to companies that submit to voluntary regulation in the run-up to 2004. The company will need to acquaint staff of the requirements of the code, and pay specific attention to the private and commercial codes in respect of their day-to-day dealings with clients. Private customer code - many firms already fulfil a number of the requirements of the private code. However, it will need to ensure that customers are advised of the firm's status as GISC members, and of the complaints procedure available. Commercial code - again, the professional approach that the firm takes in its dealings with clients mean that a number of issues are already addressed, although the method of recording or demonstrating that these steps are being taken could be better evidenced.The full health check report will help a company identify and address the areas of weakness. This will strengthen the quality of service being delivered
Complaints procedure - complaints were referred to in the document section. Minimum GISC requirements are that a complaint can be made orally or in writing, must be acknowledged within five working days, and resolved within 20 working days. If that cannot be achieved, the client must be advised of the likely timescale. Staff must be able to recognise the form of complaints, the firm's procedures, and the record-keeping requirements. This will be a key issue, as FSA regulation will demand close attention to this aspect Financial crime - again, this will be a high profile issue for the FSA. Most brokers have not seen financial crimes, such as money laundering, as an issue for them. However, there are many examples of how a general broker could unwittingly be used by criminals to clean up the proceeds of crime. The report will contain a section on this so staff can be made aware of the potential, and to develop internal procedures for the reporting of any concerns E-commerce - for firms that have websites, disclosure of status as GISC members is required, together with a hyperlink to the GISC website. For companies that trade interactively on-line, there are a number of other requirements Recruitment and staff records - GISC rules require that members make suitable checks of all employees who will act in an insurance-related activity. Firms must take steps to tighten procedures, and to verify past experience and qualifications claimed. Again, the report will highlight actions that can be taken in this area Sub-agents and introducers - following the health check, the firm should identify all individuals and firms that act as agents or introducers, and clarify and formalise the relationship in each case. It presents an opportunity to reflect on certain relationships, and to decide whether they should remain in place.Conclusion
For the first time, most companies will have to formally address many of the issues outlined above. In checking the lists you will have a good idea of what your firm's strengths and weaknesses are. You may wish to bring in a consultant who will also provide an in-depth report.
By taking these steps now, it will begin to introduce a culture of compliance within the business. Once the FSA rules are known, the firm will be able to assess what further steps will need to be taken, to approach compliance with the new requirements.
