Adam Tyler, chief executive at the NACFB, surveys the process of broker regulation in the UK
Hitachi Capital’s latest Business Barometer highlights a number of worries facing small businesses in the UK. The one that jumped out at me was the suggestion that concerns about compliance have not gone away. Instead, they’ve grown.
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We would have guessed the opposite should have happened, but now that the NACFB has completed its own application for full permission through the FCA, we find that there is misinformation out there and that the job isn’t simply done from the moment the permission is granted.
I wonder if that’s what is responsible for the rise in concerns; business owners think they have done pretty much all they need to do, then get a rude awakening. It is like being a student in an exam who writes great answers to questions A and B, and then with five minutes to go, turns over the exam paper and finds C, D and E on the back.
But the main message needs to be one of reassurance. There is more work to be done after the permission to trade has been granted, but it’s work you can make a headstart ahead of time and even, whisper it, cut corners to reduce the impact on your own workload. This is one area where I don’t need to warn brokers of the consequences of not exceeding expectations.
Just because the FCA says every broker needs a whistleblowing policy, for example, this doesn’t mean that a sole trader has to start worrying just exactly who is going to blow the whistle on whom. More than 50% of NACFB members work on their own.
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By GlobalDataStrictly speaking, the rules require them to create lots of written procedures. It’s not only the FCA who could ask to see them, it could be that they have auditors on site. All easy to say, but time-consuming to put into practice. Here’s the point, though; a business can go and buy or download basic templates – after all, one company’s training and education policy can be written in broadly the same way as the next company’s.
The FCA can’t send its foot soldiers to check up on every regulated firm, but it will find it relatively easy to do random sweeps of websites, so that’s one of the first places I’d recommend a broker to tidy up. Little things are important; careful about absolute statements; don’t think you can use the FCA logo (only the FCA can); and keep it all up to date. Not all our brokers have websites…but 94% of them do, and those that don’t, from what I’ve seen, are not ripe for conversion.
The NACFB hasn’t been scaremongering but we certainly have spent two years playing up the dangers of getting things wrong. I’ve certainly been writing about the subject for a very long time. 2016, though is the year we can sit back a bit and reassure our members. There are still cases where the wrong advice is out there and that’s something to be addressed; FCA staff are ploughing through a 400-page book. In your dealings with them, just as in your dealings with a client, getting decisions in writing can save the occasional headache. But that remains easier said than done.
The FCA recognises that smaller firms don’t earn any money from having the country’s fanciest working-from-home policy. This might just be one of those times where it would be better to hear “you need to flesh this procedure out a little bit more” than “we don’t need to see this.” A broker or small business owner should be able to trust him/herself to judge what’s worth the time spent on it.
Our own association is working on more ways of helping its members with compliance questions; we were doing this anyway, but the survey results from Hitachi bear out just how much this service is still needed.
