Compliance Update Graeme Stewart, Compliance Partner

Compliance UpdateGraeme Stewart,

Compliance Partner

Agenda

• Due Diligence• Inducement and Conflicts of Interest• Recent Developments

Due Diligence

A good due diligence document is one where the firm has: • Documented its thought process• Highlighted its key criteria• Demonstrated that their selection matches

their own objectives in achieving good customer outcomes.

Due Diligence

• When using 3rd party assistance; such as Compliance Consultants

• For a Centralised Investment Proposition• For new products or providers• For checking the identity and veracity of clients

In short; in any event where you or your firm is placing its reliance on any outside party.

Due Diligence

• Paradigm has provided a pack of information for you

• Member events> Spring Partner Forums > Handouts

Due Diligence

Due Diligence

• Due Diligence is covered in Chapter 3e of the Compliance Manual

• Includes DD template Questions for, e.g., DFM, a third party risk profiler, wraps

• FCA guidance; one minute guide.• Audit Report agenda item examples• Business Consultant auditing

Due Diligence

• Any Questions?

Inducements and Conflicts of Interest

RDR;• To remove the potential for adviser remuneration to distort

the advice consumers receive.• So providers compete on the price and quality of their

products to secure distribution rather than on commission levels

• Advisory firms are not inappropriately influenced by the payment of commission when providing advice to their customers

Inducements and Conflicts of Interest

Inducements and Conflicts of Interest

FCA;• Principle 8, of our Principles for Business

states that a firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.

Inducements and Conflicts of Interest

FCA Examples;• an insurance intermediary passing large amounts of business to a

particular insurer because they previously worked at the insurer and still had friends there;

• a mortgage intermediary passes large amounts of business to a lender because they have a relative working at that lender; or

• a product provider may offer a loan and cash gift in the expectation of getting more business in return. These are inducements or bribes.

Inducements and Conflicts of Interest

Basically;• Identify Conflicts of Interests• Make sure all staff know• Disclose any Conflicts of Interest• Manage any Conflicts of Interest (Suitability of

Advice)

Inducements and Conflicts of Interest

• Paradigm Discretionary Trust

Inducements and Conflicts of Interest

Paradigm has provided a policy document template

Use it stand alone/ insert into your Business & Compliance plan

Inducements and Conflicts of Interest

• Any Questions?

Recent Developments

• MMR (26th April 2014)

• Feedback from website (thanks)

• File Review Outcomes

Client File Review Outcomes

Thank You