Competent to stay compliant?


Providing training and competence services to firms in the insurance sector for many years has given my firm’s trainers and consultants ample opportunity to appreciate the challenges involved in running a successful insurance business in the late twentieth and early twenty first centuries. Not the least of these is the constantly moving target at which our clients have had to aim to stay on the right side of the regulator.

When I say the regulator, I should of course say: the regulators. The current incumbent, the Financial Conduct Authority (FCA), was preceded by the Financial Services Authority (FSA), which, in turn, came after the General Insurance Standards Council (GISC). With each new regulator have come significant shifts in regulatory emphasis, each one appearing to raise the bar for achieving compliance.

If simply following the rules was ever enough, it certainly isn’t today. Where the FSA focused on procedures and processes that treated the customer fairly, the FCA demands nothing less than ensuring good outcomes for customers.

The recent launch of a host of high-profile ‘thematic reviews’, along with some eye-catching fines, have focused insurance minds on compliance issues as never before. But compliance-focused training workshops have long been among the most popular we offer. As well as providing compliance training, we have also moved over the years into full-service compliance consultancy.

Our experience suggests that, while few insurance firms today do not take compliance seriously, their success in hitting the moving regulatory target has been mixed. One of the services we offer is a free half-day compliance audit. This involves our consultants going in, interviewing staff, reviewing documentation, and providing a snapshot of the strengths and weakness in a firm’s compliance regime.

This takes in a firm’s systems of governance, corporate culture, business strategy and planning, product development and sales approaches, its attitude to risk, adequacy of financial and non-financial resources and its process, systems and controls.

However seriously a firm takes compliance internally, the perspective of a seasoned pair of outside eyes can help reveal – not just potential flaws in its compliance provisions – but also how its approach varies from others across the industry. This not only highlights areas requiring attention, but also those in which there may actually be a degree of overkill.

With things like client money, the FCA’s zero-tolerance demands total attention to detail, but many aspects of regulation require a firm to form its own judgments about what will produce good outcomes for the customer. Whilst recent fines have highlighted the risk of a less than robust approach, there’s a temptation to adopt an over-exacting approach. Disproportionately ‘copper bottomed’ policies and procedures can waste time and effort. Worse, a gap between what you say you do, and what you do in practice creates regulatory risk in itself.

The key is understanding where the regulator’s current concerns lie, and that is where the oversight of experienced and practiced eyes can quickly add significant value.

Where the FSA focused on procedures and processes that treated the customer fairly, the FCA demands nothing less than ensuring good outcomes for customers.


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SEARCHLIGHT INSURANCE TRAINING - Arranging training and consultancy for the Financial Services industry - Setting up and developing a new insurance company - Leading an asset finance company - Non-Executive director Specialties: - A versatile and innovative professional executive with proven track record - Experienced non-executive director - Experienced in takeovers and mergers - Liveryman at the Worshipful Company of Insurers - Chartered Insurer

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