Exponential offers a broad range of FCA related compliance services, which allow firms to benefit from its wealth of compliance experience. We offer an external, professional resource where firms don’t have the necessary skills in house, expertise in a particular area or quite simply need additional support.
Using Exponential Solutions’ expertise can save you time as well as money. We keep abreast of the latest developments within this fast moving area and firms benefit from our interaction with other clients and the FCA. This deep reservoir of technical knowledge helps our clients to stay at the forefront of best practice and develop a culture that gives proper weight to an effective compliance strategy.
Exponential Solutions also offers remedial consultancy to assist firms in resolving problems that have occurred as a result of historic regulatory issues.
We also offer training and coaching, as well as venture capital to companies looking for investment.
In summary, the mission of Exponential Solutions is to help you embed a culture of compliance in the genes of your firm and contribute to your trading success.
Although your firm may be directly authorised and you have responsibility for your compliance function it is often helpful to speak to an outside expert. The field of financial services regulation is rapidly evolving and Exponential will ensure that you are kept in touch with the latest developments and their possible impact on your firm.
Many of our clients find it invaluable to talk to Exponential Solutions for input and advice on everything from strategic planning to helping with compliance training. Whether it’s a simple sense check or advice on a specific compliance issue – our skilled and experienced staff will be able to help add value to your business, when and where you need it. We are happy to work on either a retainer basis or to advise on a particular issue for a one off fee.
Our Financial Services team provides advice to a large number of FCA regulated clients, including securities and futures firms, banks, investment management firms, financial advisers and insurance intermediaries.
Exponential Solutions can assist with providing technical advice in respect of the following:
FCA Rules and Regulations
Compliance Monitoring Plans
FCA Compliance Health Checks
Risks Assessments (Including ICAAP, Liquidity Reporting and Stress Testing)
FCA Enforcement Action (Including Skilled Persons Reports)
Training & Competence
Regulated firms’ anti-money laundering arrangements remain a high priority for both the Financial Conduct Authority and overseas regulatory bodies. At Exponential Solutions we have a wealth of experience within this area and can help to ensure that firms are addressing the issues properly.
All firms that are subject to the Money Laundering Regulations (2007) must put into place systems and controls in order to assist in the prevention and detection of money laundering, the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin.
At Exponential Solutions we understand that firms are required to implement systems and controls in order to identify, assess and monitor both money laundering risk and suspicious transactions. In addition customer due diligence (CDD) measures and monitoring must be in place to manage the risks identified. Under the Proceeds of Crime Act 2002, a Suspicious Activity Report must be submitted to the Serious Organised Crime Agency (SOCA) where it is known or suspected that a person is engaged in, or attempting, money laundering.
All firms that are subject to the FCA’s AML rules must allocate overall responsibility for AML systems and controls to a director or senior manager. They must also appoint a UK-based Money Laundering Reporting Officer (MLRO) to act as a focal point for the firm’s anti-money laundering activity.
We work with firms to ensure that they are able to demonstrate to the FCA that the appropriate CDD measures and procedures are in place and adhered to.
Exponential Solutions can offer a range of services in relation to anti-money laundering procedures, including a review of risk assessment and CDD arrangements or Suspicious Activity Reporting and a review of the MLRO’s annual report.
Exponential Solutions offers a compliance audit service as a way of providing firms with an independent health check of their compliance standards.
The key benefits of a compliance audit are usually to identify areas where a firm is non-compliant or needs improvement along with recommending a course of action or processes which can be implemented to address any findings. If our conclusions are positive it gives you reassurance that you are running your firm to a high standard. If not, Exponential Solutions will work with your firm to ensure that you are able to quickly correct any deficiencies.
The range of possible compliance audits is extensive and we recognise that it is essential we sit down with you at the outset to determine and define precisely the scope of our work. These audits can be very broad, incorporating the compliance function as a whole or placing focus on a particular business entity or feature.
A selection of some of the Compliance Audit’s Exponential Solutions undertakes can be seen below:
Systems and controls
Call Monitoring (including quality assurance)
Training & Competence
Treating Customers Fairly
FCA regulated firms need to satisfy Capital Adequacy requirements however, understanding the relevant rules and regulations can be time-consuming and extremely complex.
At Exponential Solutions we have a team of experts who can assist you in understanding and fulfilling your regulatory obligations. Whether you are an investment bank, a fund manager or an insurer we can assist.
We also have vast experience in preparing ICAAPs and ILAA.
The purpose of the Internal Capital Adequacy Assessment Process (ICAAP) document is to keep the firm’s Board informed of the ongoing assessment of the firm’s risks, how the firm intends to mitigate those risks and how much current and future capital is necessary having considered other mitigating factors. The ICAAP document is also used by the firm to outline to the FCA or the Prudential Regulation Authority (PRA) its internal capital adequacy assessment process.
The aim of the Individual Liquidity Adequacy Assessment (ILAA) is to help firms ensure they meet the overall liquidity adequacy rule and to enable the FCA or PRA to assess firms’ liquidity more effectively. It is a key tool for demonstrating appropriate liquidity risk management.
One of the basic principles of compliance is that there must be proper systems and controls in place. In order to comply with FCA regulations these must also be properly evidenced and demonstrated.
We find so many firms we visit don’t have the necessary compliance documentation in place even though the firm believes it has robust procedures. This is an area where Exponential Solutions has helped many firms, large and small, over the years.
Whether this consists of implementing a simple process manual or a complex root cause analysis procedure, we have the skills and experience to help you. In some instances providing a basic “off-the-shelf” solution will suffice but in other cases we can work with the firm to develop more sophisticated and appropriate procedures that are bespoke to the firm and its activities. Remember the overall rule. If it isn’t in writing it doesn’t count!
Simply having the correct systems and controls in place is not enough to prove to the FCA that your firm is compliant. Your firm needs to provide clear and documented evidence that a culture of compliance is embodied within every significant decision making process, particularly with regards to your customers. The introduction of the FCA has seen the focus on this area increase significantly. We can help guide you through the considerations that are regarded as material and evidence the process.
Exponential Solutions understand that compliance is more than just ticking boxes. We can advise and help with the more holistic elements of compliance and work with companies to ensure the “compliance culture” is communicated throughout the business.
To assist its clients Exponential Solutions provides a range of compliance monitoring services to ensure a firm remains compliant. These monitoring services include quality assurance, compliance understanding training and suitability. We can also give valuable insight and guidance into the way a remedial project is being managed to ensure these stay on track.
We can provide “off the shelf” compliance monitoring solutions or work with the company to design and develop bespoke, tailored monitoring plans.
Many firms are faced with the challenge of understanding a wide variety of products which may be suitable for their clients. This is particularly the case in the investment sector where potentially high returns are linked to high risks and a large degree of volatility as well as counterparty uncertainty. It is an area where there is significant regulatory activity and this needs to be understood and conformed with.
Exponential Solutions can assist with conducting due diligence on counterparties to ensure compliance with FCA standards, whether this is as an operator of funds or SIPPs, or directly as an investor. Given the recent disasters including several failures of unregulated collective investment schemes, structured products and highly speculative geared investments, effective due diligence has never been so important.
How we carry out due diligence
Exponential Solutions uses its highly experienced and skilled team to undertake assessments on investments. We will then provide an in depth report into all aspects of the investment and its counterparties.
Exponential Solutions has undertaken extensive due diligence on investments such as:
Unregulated Collective Investments Schemes
Solar Power wind farms
Office of Fair Trading/CCL
The Office of Fair Trading (OFT) oversees the licensing of consumer credit businesses. This includes the monitoring of all licensees to ensure that they are operating responsibly as well as conducting the initial assessment as to whether a business is fit to hold a licence.
Since 6 April 2008 the OFT has adopted a more targeted, risk based, approach to consumer credit licensing, focusing resources on the areas of highest risk to consumers. As part of this approach, if your business carries out what the OFT has deemed to be high risk activities, you will need to have in place a Credit Competence Plan. This means that many businesses are subject to a higher level of scrutiny going forward; that is a greater level of monitoring by the OFT.
In addition to assisting your firm in determining the class of license you require, Exponential Solutions understands and advises on the guidance the OFT has issued on areas of regulation which it expects firms to follow. In line with the FCA’s approach to regulation, the OFT now adopts a more intrusive and proactive policy to regulation and firms that fall below the mark can expect the OFT to take action against them. The OFT has the powers to impose heavy financial penalties on firms; take court action; and revoke or refuse a licence.
Exponential Solutions can help protect your business by:
Helping you apply for a Consumer Credit Licence
Assessing your business to identify areas of non-compliance
Helping to take the actions required to become compliant
Providing an independent audit of your compliance status
Training your staff in their regulatory responsibilities and the consequences of them ignoring them
Root Cause Analysis
The FCA has underlined the clear need for regulated firms to understand the source and cause of any complaints related to the sale of regulated products and the sales processes through which they were provided to customers.
Comprehensive and accurate root cause analysis (RCA) enables a firm to identify potentially systemic issues as a precursor to potential remedial actions, including customer contact exercises and past business reviews. Such data also enables a firm to improve future products and sales processes.
The FCA expects regulated firms to be in a position to analyse data to identify the core causes of complaints and to use such information to inform its approach to identifying and dealing with any potential product design or sales process shortcomings.
At Exponential we have extensive experience in working with clients to gather, analyse, interpret and report root cause analysis data across the banking, investment, general insurance and mortgage sectors.
Training and Competence
All FCA regulated firms are required to demonstrate that their staff are competent to perform their role. Devising a process which enables the assessment of staff competence, identification of training needs and then implementation of the required courses/training to ensure that staff are up to speed is crucially important. A key area of business for Exponential Solutions is in the provision of training and assessing staff.
Exponential Solutions offers on and offsite training, at both a senior and junior level. We can assess staff, recommend who needs training and the level of training required to meet required competence levels. We can plan and arrange courses or ongoing training and have run successful “train the trainer” schemes in a number of large financial organisations.
Whilst minimum standards of performance will be required before an individual can carry out their role, competence does not have to be achieved prior to undertaking the activity as long as appropriate supervision is in place. However, once an individual is assessed as competent the level and intensity of supervision can become significantly lower.
Exponential are able to put in place clear criteria and procedures for both achieving and maintaining competence.
Skilled Persons Report (SP166)
The regulatory bar is constantly being moved higher and scrutiny from the FCA has become more intense.
A Skilled Person Review is one of the regulatory tools the FCA can employ under FSMA as amended by the 2012 Act. The number of Skilled Persons Reports has grown dramatically in the last 5 years. Currently running at around 300 a year, the number is expected to increase in the next two years.
There are two types of Skilled Person Review as amended by the 2012 Act that gives the FCA the power to commission reviews by Skilled Persons as required:
s166 Reports by Skilled Persons; and/or
s166A Appointment of Skilled Person to collect and update information
At Exponential Solutions we have considerable expertise at undertaking Skilled Persons Reports and can help with all stages of the process, particularly in undertaking such a report and implementing any recommendations that may arise from such findings.
Companies that operate under the guidance of the FCA have to meet strict and complicated capital adequacy requirements in order to maintain their status as an FCA registered business.
We have extensive experience of dealing nationwide with a range of FCA registered firms from insurance intermediaries, financial advisors and boutique firms to full MiFID investment firms.
The services they provide in this highly specialised area are as follows:
Assistance with profit and loss, balance sheet and cash flow projections needed for registration
Full outsourcing service to cover all aspects of the firms accounting requirements i.e. bookkeeping, management accounts, payroll etc.
Assistance and preparation of periodic FSA Gabriel returns
Full accounting and audit services
Tax efficient arrangements that allow you to work within your business’ capital adequacy requirements
Resourcing – Managed Client Services
The last few years have seen the FCA obliging many financial institutions, large and small, to undertake complex remedial projects aimed at compensating tens of thousands and sometimes millions of customers for past mis-selling activities. If your firm has a need to manage a large scale compliance project, particularly involving remedial work, Exponential Solutions can assist. We recently completed a large scale, change management programme for a well known financial institution, after it was penalised heavily by the FCA over mis-selling issues.
At Exponential we have a track record of delivering complex technical solutions to banks, building societies and other financial institutions. In addition, we can supply the human resources necessary to undertake large scale projects.
Our Managed Client Services offers access to a team of compliance experts who can also take on remedial work required by financial organisations.
Resourcing – Coaching
Exponential provide trainers and coaches to help ensure firms’ staff are trained to the required levels of compliance competence.
Our trainers have on average more than fifteen years’ experience in designing and delivering management development modules in over twenty countries for private, public and governmental organisations. What sets them apart in their delivery is an absolute focus on the needs of the people sitting in front of them on that particular day. If they have to adapt a module on the spot to help someone understand a point more clearly, they will do so.
At Exponential Solutions our working definition of coaching is the means by which a person supports another in improving their performance. We believe in coaching teams of individuals who support each other through effective feedback and who work within a culture of continuous improvement to create a competitive and sustainable advantage for their firm.
At the heart of Exponential Solutions’ approach is the creation of a programme designed specifically to support each individual to build up their managerial skills and techniques. Our coaches are accredited in the use of 360 degree feedback, communication style (DISC/Insight) and Emotional Intelligence tools. We are members of the European Mentoring and Coaching Council (EMCC).
Our consultants benefit from the combination of being “Big Four” trained with many years’ experience of hands on management across a range of sectors. We are therefore able to blend rigorous methodology with a practical understanding of the training needs of your firm and sector. We are currently helping clients to up-skill and reconfigure the skills of their people in order to help them emerge strongly from the current downturn.
Resourcing – Venture Capital
At Exponential Solutions we sometimes come across firms who, for whatever reason require additional capital either to commence trading, to support an existing model or to permit expansion.
The knowledge we build of such firms through our compliance work is such that it can give us a uniquely well informed view of the commercial prospects of such firms and we are prepared in appropriate circumstance to back our judgment with investment capital, either cash or in kind.
If you have a business where you feel having some investment support would be mutually beneficial then there may be the opportunity to work together jointly with Exponential Solutions.