T&C – Hot topics from the Insurance

Company perspective

Julia Kirkland, Chartered MCSI

Managing Partner, FSTP LLP

Agenda

• Product design and suitability

• Remuneration and incentive design

• T&C issues

• FCA focus on the responsibilities and

competence of SIF’s

Regulators

Regulate 26,000 firms

23,000 regulated solely by FCA

“We regulate the financial services industry in the UK. Our aim is to protect consumers, ensure our industry remains stable and promote healthy competition between financial services providers.

We have rule-making, investigative and enforcement powers that we use to protect and regulate the financial services industry. We are fair and principled in our approach to regulation.”

Published on FCA website

Issue for all firms

These are all interlinked and not discreet activities!!

Please tick this box

It is about doing the right thing all the time, every time

and being about to prove it!!

TCF

Competence

Oversight

Governance

• Lest we forget the six Cultural Drivers

– Leadership

– Strategy

– Decision Making

– Controls

– Recruitment, training and competence

– Reward

Issues Senior Managers and Boards

all firms

Please tick this box

Product design and suitability

Competition can lead to lower prices, greater

innovation, better design, better quality and wider

choice, which ultimately leads to consumers being

better off and growth in the economy (FCA website)

Sept – FCA announce

market study into

cash savings

Retirement

Products

Product design and suitability

Spring 2014 – Wholesale Strategic Review

Product governance from drawing board to board

room table

Remuneration and incentive design

Remuneration code applies to 2700 firms

Main features;

Who it applies to

Deferral

Proportion in shares

Guarantees

Questions for senior managers

• Are senior managers satisfied

that the products you design

deliver the right customer

outcomes?

• Is your remuneration and

incentivitsation policy designed

to ensure the right outcomes

for customers?

“Just one more

thing….”

What do your product governance and

remuneration policies say about your

organisations culture?

Supervision in practice – Changing levels of supervision

Trainees/joiners

Supervision above

that expected on a

continuing basis

Competent

employee

Monitored on a

continuing basis

Attaining

competence

T&C issues

Must have inclusions for an effective T&C

Scheme

• Who owns it?

• What’s is purpose?

• Recruitment

• Attaining competence

• Assessing competence

• Maintaining competence

• Supervision and supervisor

responsibilities

• Record keeping

“There will be increased scrutiny of SIF holders once in post: greater

personal accountability and closer FSA engagement”

“Key objective of the new Significant Influence

Function regime is to bring about culture change in

the boardrooms of the UK financial sector”

“Competence and capability of SIFs: a major

shift in regulatory approach”

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FCA focus on the responsibilities and

competence of SIF’s

FCA focus on the responsibilities and

competence of SIF’s

• Robust governance arrangements,

• Clear organisational structure

• Well defined, transparent and consistent lines of responsibility,

• Effective processes to identify, manage, monitor and report the risks

it is or might be exposed to

• Internal control mechanisms, including sound administrative and

accounting procedures and effective control and safeguard

arrangements for information processing systems

SYSC1.1

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Core Competencies for SIFs

• Market knowledge

• Business strategy and model

• Risk Management and control

• Financial analysis and controls

• Governance, oversight and controls

• Regulatory framework and requirements

Questions for senior managers

• How are senior managers

assured that competence of all

staff is assessed?

• What MI do senior managers

receive about the competence

of staff? “Just one more

thing….”

Who tests the competence and

capability of the SIFs?

Q&A