A UK based distributor engaged Huntswood to conduct regulatory assurance and governance reviews of its elite intermediaries.
Huntswood was first engaged in 2012 by a UK based distributor to conduct regulatory assurance and governance reviews of its elite largest intermediaries.
Our engagement was to provide comfort to the distributor, and the panel on the quality of business being submitted by these firms and the culture within the intermediaries.
In order to be an elite intermediary, the firm requires each intermediary to agree to operate against a set of agreed criteria covering the following areas: governance; management information; recruitment; training and competence; supervisory / compliance resource and approach; complaints; financial audit; professional indemnity; and professionalism.
We were tasked with providing regulatory assurance to the distributor and the panel of intermediaries it uses on : (i) the engagement of senior management with the regulatory environment; (ii) the robustness of the control environment in place in each firm; (iii) the quality of business being submitted by the firms; and, (iv) the culture within each firm based on conversations undertaken with staff throughout the organisation.
As agreed with our client before the project commenced, the work was conducted over three cycles changing and developing the approach as we progressed to ensure the activity provided adequate comfort to both the firm and its panel. The cycles varied in terms of scope but always covered as a minimum: interviews with senior management and front line advisers; sample file reviews of new business; a review of recently handled complaints; and a review of individual advisers’ training and competency records.
In the first cycle we considered and reviewed whether the intermediaries were meeting the minimum criteria set out by the firm.
During the second cycle we reviewed intermediaries’ approaches towards implementing regulatory requirements.
In the third cycle, we conducted a general review of systems and controls in each intermediary and requested that senior management provided an attestation that the firm continued to meet the minimum entry criteria.
Within our auditing process we carried out on-site testing in the following main areas:
New business files, which were reviewed with a customer outlook focus
Reviewing recently handled complaints with our client’s reputation in mind
To review the people focused element of the review, we reviewed training and competency records for advisers. We also carried out interviews with senior management to assess key business risks and determined the culture within each firm.
At the end of each cycle, the individual intermediaries received a regulatory assurance report which set out our findings and recommendations aligned to regulatory requirements and industry best practice.
The distributor also received a consolidated report which is used, among other things, to further conversations with the panel around commercial terms.
The providers and distributors throughout the supply chain were provided with a qualitative and quantitative assessment of the relative performance and quality of a customer sale.