Ethos Broking Compliance Update

WINTER 2019

COMPLIANCE NEWSLETTER

CATCH UP ON THE LATEST REGULATORY NEWS AND GUIDANCE FROM THE RISK AND COMPLIANCE MANAGEMENT TEAM.

AUTUMN COMPLIANCE NEWSLETTER //

DECEMBER 2019

Compliance Helpdesk: compliance@bravo-group.co.uk

GENERAL INSURANCE DISTRIBUTION CHAIN

All general insurance insurers and intermediaries need to consider the extent to which issues are identified and the harm that this can cause such as customers buying unsuitable products, paying excessive prices or not receiving services expected.

The FCA has recently conducted a thematic review (TR19/2) which focused on the value in the general insurance distribution chain and delegated authority arrangements and sent all firms a ‘Dear CEO’ letter to inform them of their findings.

>> Please click here to read the full article and the findings of the review

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COMPLIANCE NEWSLETTER | VISIT HUB.BROKERNETWORK.CO.UK

CREDIT RISK REMINDER

Please click here to read our article on what to look out for when assessing credit risk when using MGA / wholesale broker markets. It considers good practice guidance and support that can be offered by Ethos Broking to monitor these markets.

AUTUMN COMPLIANCE NEWSLETTER //

SENIOR MANAGEMENT & CERTIFICATION REGIME – STATEMENT OF RESPONSIBILITY

DECEMBER 2019

On 9th December 2019 the Senior Managers and Certification Regime (SMCR) will come into effect for insurance intermediaries. The FCA recently published final guidance on Statements of Responsibility under the SMCR and in this article we take a look at the requirements and what firms should be considering when drafting a Statement of Responsibility.

>> Please click here to read the full article

SME ACCESS TO THE FINANCIAL OMBUDSMAN SERVICE Changes in respect of eligibility for SME Access to the Financial Ombudsman Service (FOS) have now gone ahead following previous FCA proposals which took effect from 1st April 2019.

>> Please click here for more information on the key changes and the requirement to order new Consumer leaflets as a result

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COMPLIANCE NEWSLETTER // JUNE 2019 // AUTUMN COMPLIANCE NEWSLETTER

DECEMBER 2019

Compliance Helpdesk: compliance@bravo-group.co.uk

CAPITAL RESOURCE REQUIREMENTS The FCA requires firms to hold a minimum amount of capital so that they have sufficient resources to absorb routine losses and redress claims against them.

It is always a firm’s duty to maintain adequate resource and not just when they come to complete their RMAR. Failure to maintain adequate capital resource will result in your firm being in breach of regulatory requirements. This reportable breach is notifiable to the FCA and can have a serious impact on your firm.

>> Please click here to read the full article

WHAT IS A TRADING NAME?

COMPLAINT HANDLING Following on from the supervisory work conducted by the FCA around how GI firm handle complaints, it has been revealed that some firms are not dealing with complaints correctly.

It is important that complaints are dealt with correctly and in a timely manner. Firms also need to ensure that they take steps to ensure that they fully investigate complaints and ensure that lessons are learnt from those complaints.

>> For more information on complaint time scales and what firms need to do, please click here

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COMPLIANCE NEWSLETTER | VISIT HUB.BROKERNETWORK.CO.UK

A trading name or a business name (as it is becoming more commonly known) is a name used by companies to perform their business under; it is different from their registered legal name.

Members will need to add any trading names that belong to the firm to the Financial Service Register. Registering a trading name has no legal effect as far as the FCA is concerned.

Some trading names could be what the FCA defines as ‘sensitive names’. Trading using a name which contains a sensitive word without getting the FCA’s consent is an offence. The business committing the offence (and individuals running the business) may be subject to a penalty.

>> Please click here to read the full article

AUTUMN COMPLIANCE NEWSLETTER //

TOP TIPS TO CONSIDER BEFORE

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ENGAGING IN AN APPOINTED REPRESENTATIVE AGREEMENT

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As part of the Ethos Broking Agreement (section 4.1 (ii)), Ethos Brokers are contractually obliged not to enter into an AR agreement either as Principal or AR of a Principal without first obtaining the express written permission of Ethos Broking. This applies even if the proposed AR/Principal arrangement is with another Bravo Group broker.

DECEMBER 2019

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An Appointed Representative (AR) is a firm or an individual which conducts regulated business on behalf of a firm directly authorised by the Financial Conduct Authority (FCA) and is noted on the FCA Register as such. The directly authorised firm is known as the ‘Principal’ and is responsible for ensuring the Appointed Representative meets its obligations with FCA rules.

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An AR arrangement imposes onerous obligations on the Principal and there is an expectation from the FCA that the Principal will conduct their affairs with the AR in a similar manner.

Before a Broker recruits an AR, sufficient checks should be completed on the firm or individual to ensure they are financially stable and that they have achieved and are maintaining an adequate level of competence.

Members must be able to fully demonstrate in written representation to Ethos Broking why any AR arrangement should be agreed to.

>> Click here to see the full list of our AR Top Tips

1. What does SMCR stand for?

CPD

ACTIVITY

2. What is an Appointed Representative (AR)?

3. It is an offence to use what type of

trading names without FCA consent?

4. Within what period should firms aim to resolve formal complaints?

5. The FCA’s recent thematic review

(TR19/2) focused on which two areas of distribution?

>> Click here to download this activity as a PDF to keep for your CPD records

ANSWERS - 1. Senior Management & Certification Regime. 2. An Appointed Representative (AR) is a firm or an individual which conducts regulated business on behalf of a firm directly authorised by the Financial Conduct Authority (FCA). 3. Sensitive names. 4. 8 weeks. 5. Value in the general insurance distribution chain and delegated authority arrangements

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AUTUMN COMPLIANCE NEWSLETTER //

DECEMBER 2019

Compliance Helpdesk: compliance@bravo-group.co.uk

THE END OF ‘PASSPORTING’?

As you will no doubt be aware, Britain is due to leave the EU on 31st October. The UK leaving without a deal would mean the end of ‘passporting’, therefore meaning firms will no longer be able to conduct business in the EU. To understand how this could impact your firm, click here to read more.

COULD YOU BE AT RISK OF MIS-SELLING? You may have seen in the news that the FCA has fined The Carphone Warehouse £29,107,600 for failings that led to the misselling of its mobile phone insurance and technical support product, ’Geek Squad’.

Bear in mind a similar risk exists with your customers if your staff do not properly identify whether the cover is of any benefit to your clients. Click here to read more.

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COMPLIANCE NEWSLETTER | VISIT HUB.BROKERNETWORK.CO.UK

FCA AUTHORISATION TO SUPERVISION ONE-YEAR CALL As part of the ongoing approach to supervision, the FCA has introduced an Authorisation to Supervision One-Year Call. We’re pleased to say some of the Risk and Compliance team have been involved in this process and have shared their findings on what to expect.

Click here to read more.

AUTUMN COMPLIANCE NEWSLETTER //

DECEMBER 2019

Change in control

THINK BEFORE YOU ACT! D ID YOU KNOW?

Did you know failure to notify the FCA of a Change of Control is a criminal offence? Ask yourself do you know what is a Change of Control? Has your firm made changes recently or in the past?

Did you notify the regulator?

To understand how this could impact your brokerage, please click here to read more.

GDPR FINES TO BE AWARE OF The Information Commissioner’s Office (ICO) is looking to fine British Airways a record £183m for infringements of GDPR following a cyber incident and Marriott International £99m for data breaches under GDPR. Click here to find out more.

DO YOU HAVE THE CORRECT PERMISSIONS? In this article, we investigate what permissions you require when introducing customers to a Premium Finance Provider. We also look at Payment Plans being offered by some software house / broking platforms and the regulatory implications of these.

SUPPORTING YOUR VULNERABLE CUSTOMERS The FCA has published a guidance consultation on how firms should approach the fair treatment of vulnerable customers. The guide provides clarity to all firms on how to deal with at risk, or potentially susceptible, clients.

Click here to find out more.

UNDERSTANDING THE CERTIFICATION REGIME Are you familiar with the FCA’s new Certification Regime coming into effect on 9th December?

Click here to find out more.

Click here to find out more.

SALES CHECKLIST – WHY SHOULD I HAVE ONE? Do you ask yourself the above when following processes and instructions? If you answered yes, you’re not alone. To help you, we’ve compiled a list of observations and explanations on sales and renewals processes and checklists.

Click here to find out more.

COMPLIANCE NEWSLETTER | VISIT HUB.BROKERNETWORK.CO.UK

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SM&CR – ARE YOU PREPARED? SM&CR CONDUCT RULES The SM&CR brings with it new conduct rules for general insurance brokers. In this article, we take a brief look at what the rules are and who they apply to.

>> Click here to find out more

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CHECK OUT THE SM&CR TOOLKIT SM&CR is almost upon us, and we’ve been busy developing documentation, training and guidance to ensure you encounter a smooth transition into the new regime. On the Hub, you will have access to our SM&CR Toolkit, which contains template documents and direction, learning resources and relevant industry guides for reference.

>> Click here to access the toolkit

WHAT IS ‘THE DIRECTORY’?

As part of SM&CR, the FCA has created ‘The Directory’, the new public register which allows individuals and firms to check the details of key people working within financial services. We take a look at the data held on ‘The Directory’.

>> Click here to find out more

COMPLIANCE NEWSLETTER | VISIT HUB.BROKERNETWORK.CO.UK

HAVE ANY QUESTIONS? If you have any compliance queries or any questions about any of the articles in this newsletter please contact the Compliance helpdesk: compliance@bravo-group.co.uk

COMPLIANCE NEWSLETTER | VISIT HUB.BROKERNETWORK.CO.UK

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