WEALTH AND ASSET MANAGEMENT GOVERNANCE

It is important to understand how the FCA reviews firms in terms of its Firm Systematic Framework (FSF) reviews, as part of its FCA supervision model. The FSF is designed to allow supervision to focus on key conduct risks in all types of firms. The FSF considers each conduct risk in context to the potential harm to consumers, as well as the impact a risk could have on the market. At the heart of the FSF, the FCA asks a simple question: “Are the interests of customers and market integrity at the heart of how the firm is run?” A FSF therefore assesses a firm’s business model, strategy, sales processes, post-sale, product design and governance culture. Please click on FCA Enforcement Action to understand the importance of a Governance Frameworkto avoid FCA focus

As a recent example was a FCA’s Dear CEO letter (13th June 2019) to Wealth Management and Stockbroking firms setting out its view of the key risks of harm that firms could pose to their customers or the markets in which they operate, in particular: By losing confidence in the industry’s ability to deliver their financial objectives due to mismanagement of conflicts of interest and market abuse; What Governance Connect brings is a front office practitioner approach with a core understanding of Compliance, Risk, Audit and the Front Office Controls to pre-empt of help to solve the BAU issues that have already happened. Based on past experiences, a lot of solutions are around identification and controls. Equally, to set up key risk indicators and committees to monitor, have a holistic view of the business and help direct resources in the right way. Fund Governance allows Asset Managers to meet their obligations by ensuring Funds are run by investment managers of appropriate standing and expertise; The risks of any new fund are identified and can be effectively controlled; Investors are aware and understand the risks of investing in individual funds; Committees and functions are established to provide an additional level of oversight and control Risk monitoring Develop a list of key risk indicators for a risk committee Track and report on incidents and complaints Define and implement risk & control reporting Asset Management Oversight Operations Compliance and Regulatory observance Risk Management Investment Performance and Investment Risk

1. To offer training sessions on investment and fund governance for senior management and fund directors (fund boards). 2. To work on any single product or investment governance issue or management information; to give senior management and fund boards the necessary information for their fiduciary duties in terms of Investor Protection. 3. To help with any aspects on asset manager and fund due diligence Quite simply Governance Connect is here to help firms avoid Conduct risks becoming Issues, funds being forced to Close, Fines and Client Restitution. Governance Connect was formed to help firms to set up the appropriate Systems and Controls so as to avoid (conduct) risks emerging, which if not detected could turn into issues and a negative outcome for a client, the firm (brand) and the market (market abuse). Governance Connect can work on single issues, but we would recommend that an asset manager goes through a full Due Diligence health check, that can help identify areas, departments, policies and procedures for enhancements to allow continued good “customer outcomes” and comply with SYSC 2 and SYSC 7 (Corporate Governance, Committees, Terms of Reference, Management Information). If required, Governance Connect can work with firms to make sure that processes are in place; from having a functioning Risk Management Policy and a process in place to identify conduct risks before they become issues and the FCA starts knocking on the door. All in all - to make sure the asset manager or Authorised Fund Manager is on the right side of regulation. The Danger of Omitting to Review Internal Departments By omitting to review departments, processes, systems, controls and culture can lead to Conduct Risks and poor customer, business and market outcomes. The knock-on effects are for the FCA to force firms to spend time and take resources away from positive business aspects to be used on: Risks Issues Re-building the brand Fire-fighting client retentions Lost business and an inability to get new business Breaches Regulatory oversight, fines and censures Products being suspended and closed FCA direction to NOT undertake certain types of lucrative propositions Costs, Time and Money affecting profitability and business viability Who is Accountable for a Lack of Governance – the CEO? Within your firm who is responsible for joining the dots up between the various oversight functions, such as Compliance, Risk, Audit, Management and the Board – to make sure that the above negative risks and dangers do not occur? Governance Connect has been specifically set up on the back of a desire to help financial institutions and people: Create good customer outcomes Prove that their products and services can be audited in terms of value for money To keep the regulator and other oversight organisations at bay due to a good governance framework (member's page) and internal oversight controls Senior Managers and Certification Regime(member's page) all the above can also help with making sure a firm is in compliance and can prove compliance with the SM&CR.