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Compliance Portal
Is your compliance framework working as effectively as you think it is?
Having policies, procedures and controls in place is only part of maintaining an effective compliance framework. Firms also need a structured way of checking that those arrangements are working in practice and identifying where improvements may be required.
A Compliance Monitoring Programme (CMP) provides that framework.
A CMP is a planned and documented programme of compliance monitoring activity designed to assess whether a firm's regulatory processes, systems and controls are operating effectively. It can help management identify weaknesses, emerging risks and areas requiring remedial action before they develop into more significant regulatory or customer issues.
Importantly, compliance monitoring shouldn't simply be about identifying what has gone wrong. A good CMP should provide management with meaningful assurance about what is working well, where risk is increasing and where attention or investment may be needed.
What should a Compliance Monitoring Programme include?
There is no benefit in creating a lengthy monitoring schedule simply for the sake of demonstrating that one exists. An effective CMP should be risk-based and focused on the areas where the business needs assurance.
Depending upon the nature of the firm, monitoring could consider areas such as:
- Consumer Duty and customer outcomes
Assessing whether processes and controls support good customer outcomes and whether the firm has appropriate evidence to demonstrate this. - Product governance and distribution
Reviewing how products are selected, distributed and monitored and how the firm's activities fit within the relevant distribution arrangements. - Sales and customer files
Testing individual files to assess whether required processes have been followed, customer needs have been appropriately considered and relevant records have been maintained. - Financial promotions
Reviewing the firm's arrangements for approving, issuing and monitoring financial promotions. - Complaints
Considering complaints handling processes, management information, root causes and whether recurring themes indicate wider weaknesses. - Vulnerable customers
Assessing how the firm's policies and procedures translate into practical identification, support and treatment of customers with characteristics of vulnerability. - Training and competence
Reviewing whether employees have appropriate knowledge and competence and whether the firm's training and competence arrangements provide suitable oversight. - Appointed Representative oversight
For principal firms, monitoring may form an important part of the framework used to oversee ARs and assess whether appropriate systems and controls remain in place. - Governance, policies and regulatory records
Testing whether documented procedures remain appropriate and, importantly, whether day-to-day business practices reflect those procedures. - Regulatory Reporting
Ensuring the firm is aware of it’s regulatory reporting responsibilities and has made suitable provision to complete all regulatory returns on the ‘My FCA’ portal. The precise scope should reflect the risks within the business rather than applying the same checklist to every organisation.
Who should have a Compliance Monitoring Programme?
The nature and complexity of a CMP will vary considerably depending on the business.
For insurance firms, this may include:
- insurance brokers and intermediaries;
- MGAs and delegated authority businesses;
- networks and principal firms;
- firms with Appointed Representatives;
- firms operating across multiple products, markets or distribution channels; and
- businesses experiencing significant growth or organisational change.
A smaller intermediary will not necessarily require the same level of monitoring as a larger or more complex organisation. The important point is that the programme should be proportionate to the firm's business model, regulatory obligations and areas of greatest compliance risk.
