Know Your Customer (KYC)

TCC is currently in the middle of intensive projects 
with leading wealth management companies, assisting 
them with their reviews and helping them to develop 
policies and systems and controls to meet what the regulator is asking of firms in this space. As such TCC fully understand these requirements and we are in regular 

correspondence with the FSA on behalf of their customers.

In June 2011 the FSA wrote a Dear CEO letter to a number of wealth managers with the findings of its recent review. There were a number of key areas of concern that the FSA raised that all firms need to consider and incorporate into their processes. TCC is actively involved with helping firms understand and establish the processes needed and reviewing past business to identify any deficiencies.

TCC is able to employ volumes of high quality, experienced resources to deliver  a full range of regulatory services from file reviews through to designing and implementing policies and strategies.

The key areas of concern from the FSA review highlighted a number of weaknesses in firms’ inability to demonstrate that client portfolios and/or portfolio holdings were suitable. Firms were not able to demonstrate suitability because of:

• an absence of basic know-your-customer (KYC) information
• out-of-date KYC information
• inadequate risk-profiling
• some firms not implementing MiFID client classification requirements
• the lack of a record of clients’ financial situation (assets, source and extent of income, financial commitments)
• the failure to obtain sufficient (or any) information on client knowledge, experience and objectives
• inconsistencies between portfolios and the client’s attitude to risk
• inconsistencies between portfolios and the client’s investment objective, investment horizon and/or agreed mandate

TCC will ensure you are taking reasonable care to organise and control your affairs responsibly and effectively, using adequate risk-management systems.

TCC will provide skilled resource to deliver updated suitability methodologies and supporting processes and procedures to support the requirements of the FSA.  We will use our knowledge of the industry and the regulator, along with findings and intelligence from other work already underway in similar organisations.  

We can supply you with file review resources and / or conduct a 2-stage review:

• The first phase is to establish the regulatory standards applicable to your services
• The second phase is to undertake a gap analysis of the review approach using the information identified in phase 1.

Using comprehensively gathered information TCC will identify the regulatory standards that apply (currently and historically) taking into account rules and guidance (COB & COBS), ad hoc guidance issued by the FSA, Final Notices, the FSA’s paper on Assessing Suitability and the content of the Dear CEO letter.  TCC will also consider FOS decisions to establish what precedents may have been set. 

Using this information TCC will produce a gap analysis tool. The purpose of the gap analysis would be to determine whether the proposed review approach will provide a sufficiently challenging assessment and will be sufficient to assess all of the regulatory standards applicable to the services provided.

For further information please contact TCC on 020 3008 6020 or email info@theconsultingconsortium.com