FSA Regulation
Broker Regulatory Risk Tool
As part of your systems and controls, you should consider the different types of deals and trading arrangements that you are happy to accept.
We have designed a simple to use tool, which helps you think through whether the different trading arrangements you have in place present you with any regulatory issues, and if so are you managing these appropriately
Each of these arrangements will have a different value and risk, and we suggest that you look at the content of each arrangement against the criteria of regulatory risk and broker value
Regulatory Risk is the risk that the incentive will encourage you (the intermediary), or your staff to act in a non-compliant manner. The key FSA principles involved are
- Treat The Customer Fairly (and act in their interests)
- Manage Conflicts of Interest in your Business
- Integrity
It is important to remember that it is not just the type of arrangement that presents the risk, but the levels of systems and controls that exist around ensuring that the arrangement is not used inappropriately.
- Intermediary Value is the level of value that you, the intermediary perceive the arrangement as giving to your business. This will typically be linked to the likely improvement this will make to your businesses profitability, and the level of control exerted over making it happen (when related to performance criteria)
For each intermediary, the issues are different and therefore we suggest you read the Regulatory Risk of Trading Choices information and consider which of these incentives your business is involved with and use the regulatory risk tool to plot them
Once you have completed this it is worth considering which of these activities you want to review with your insurers to ensure that you are happy with the regulatory risk that you have accepted by entering into these agreements. If you are unhappy with any Norwich Union arrangement please discuss this with your Account Manager.
