Financial Crime enhancements and removal of restrictions for an investment advisory firm
A UK-based financial services firm specialising in securities trading, corporate finance and investment advisory services had received an FCA feedback letter outlining issues with its Financial Crime (FC) framework. This included inadequacies in its customer onboarding and periodic review procedures.
As a result the FCA instructed the Firm to commission a Skilled Person review (s166) and placed Voluntary Requirement (VREQ) restrictions on the firm — affecting its ability to onboard new customers and posing a potential significant commercial impact on the future of the Firm. We were appointed as the Skilled Person.
The FCA provided the Firm with a relatively long period in which the first phase of the review needed to be conducted. Hence we agreed to sequencing of the review with the FCA and the Firm to give it time and opportunity to remediate the FCA identified issues before commencing our formal review. The Firm had separately commissioned a third party advisory Firm to support it in that remediation and we could see that there was a realistic indication that the Firm would make tangible progress.
In the period prior to our review, we held periodic workshops with the Firm and their advisor so they could update us on progress which also allowed us to provide value-added observations to the remediation activities they were undertaking.
Once the review commenced we used our tried and tested methodology for Skilled Person reviews to undertake the review expediently including sequencing of testing to allow the Firm to complete any outstanding tasks. These mainly related to the remediation of customer files and derisking through offboarding where customers were no longer in line with the commercial and risk appetite.
The original plan was for the review to go to a second phase where we would evaluate the Firms resolution of any recommendations we raised. However, the Firm had made positive transformational progress in their remediation, and we found no significant findings. Instead we undertook a targeted review on a series of key recommendations which the Firm was able to remediate quickly which gave the FCA enough comfort to remove the VREQ and allow the Firm to exit the Skilled Person process.
