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On 12th April the FCA published its Business Plan for the next twelve months. This has become an increasingly important reference point for all authorised firms as the FCA is highlighting its key areas of focus across all of the business sectors they regulate. This does not mean the FCA will turn a ‘blind eye’ to matters of less significance however it does identify the issues they consider at this time to have the greatest potential impact for consumers and the wider financial services industry.

For regulated firms it indicates the FCA’s likely direction of travel and firms can assess their current policies and procedures against the risks identified by the FCA.

Many of the risk areas identified are a continuation of the previous year’s priorities, e.g. prevention of financial crime, fair treatment of consumers, however it is also a recognition of new risks in an ever-evolving financial services industry, e.g. the growing use of cryptocurrencies, and the changing needs of consumers brought about by demographic change.

The following is a brief summary of the issues that could reasonably apply to ShareIn’s Appointed Representatives. We recommend our Appointed Representatives take time to read the FCA Business Plan and consider any actions your business could take in light of the steps being taken by the FCA.

Cross-sector issues

Culture and governance – is your decision-making focused on delivering good outcomes for your investors? How well do you communicate your culture and expectations to your staff? Do you have an effective, documented complaints handling policy to help you manage those situations when something has gone wrong, or your service has been below your investor’s expectation?

Operational resilience – technology is integral to the delivery of financial products and services, but the increased use and sophistication of technology also brings risks. Cyber criminals are increasingly targeting small firms as they are considered the industry’s weak links. Consider how secure your systems are to cyber attack and is there more you could do at no cost or very little cost to enhance the security of your systems and investor data? If you share data with third parties, perhaps for marketing purposes, do they have appropriate measures in place to protect your data?

Financial crime and anti-money laundering – the FCA aims to make the UK’s financial market a difficult target for criminals. What information do you collect from your investors when they are using your services to help you manage the risks from financial crime? Do your staff know their individual responsibilities in helping to prevent your products and services being used by criminals, and do you have a process in place to remind your staff of their responsibilities?

Retail investment sector priorities

Suitability of advice and disclosure – the ghost of the PPI mis-selling scandal continues to haunt the financial sector and the FCA expects transparency in communications and product literature ensuring investors are given all of the relevant information to help them make an informed decision.

Whilst you cannot give investors advice on the suitability of your products and services, you can ensure your messaging to investors adequately recognises the risks in crowdfunding as well as the expected benefits. Our Financial Promotions Do’s & Don’ts guide gives you a concise, easy-to-use resource that highlights the key points you must consider when marketing your products and services.

In addition, it is our expectation that all financial promotions will go through an internal review by a senior member of your team before you pass the communication to ShareIn for review and approval.

ShareIn will be happy to provide refresher training for our Appointed Representatives to help you get this right first time, avoiding re-work to address issues that could easily be identified by an internal review, and ensuring you can issue communications that help you promote the value you aim to deliver to your investors. If you have questions on any of the above please do not hesitate to contact ShareIn and we will be happy to work with you.

Interested in becoming an Appointed Representative? Please get in touch.

Tags: Regulation

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