Financial services intermediaries quality assurance and tcf questionnaire[fsa]

FINANCIAL SERVICES INTERMEDIARIES
Professional Indemnity Insurance - Quality Assurance Questionnaire

CONTENT
Introduction Section 1
Frequently Asked Questions Section 2
Instructions for Completion Section 3
Your Details Section 4
Standard Form Questionnaire Section 5
Comprehensive Form Questionnaire (optional) Section 6

1 INTRODUCTION

This questionnaire can be used by the following groups of financial service intermediaries as its content will adapt to suit the profile entered in the 'Your
Details' section:

l Financial Advisers
l General Insurance Intermediaries
l Home Purchase & Reversion Intermediaries

Background
Effective risk management is an essential feature of all successful professional organisations and is one of QBE’s key considerations when reviewing
policies. Our statistical analysis tells us that, on average, firms that do not engage in our risk assessment process, experience claims values 35% higher
than those firms that do participate. The primary purpose of our questionnaire is, therefore, to raise awareness of risk management issues and to
encourage the adoption of quality assurance principles to manage risk. It is not solely about results achieved, and we do not expect all firms to score
100%. Rather, we aim to work with our insured clients to improve their management processes so that the likelihood and value of claims is reduced. We
recognise that this process takes time, but this is wholly consistent with our approach of continuity, stability, and our long-term commitment to the
professional indemnity market.

Benefits
Your response to this questionnaire will be analysed to prepare a report on your business with reference to our ’Professional Management Standard:
Insurance, Mortgage & Investment Intermediaries’. The report, which is free of charge, will be delivered to you in hard copy, and will include prioritised
action points for your consideration (a colour-coded system indicating your action priorities as high, medium, low or other), plus a TCF summary showing
the FSA’s six TCF Indicators mapped against each of the requirements. You will be able to use this to identify TCF gaps and subsequently chart
improvement progress as you implement the corresponding recommendations.

QBE is the only insurer that has sought to harmonise its Quality Assurance (QA) and Risk Management procedures with an industry specific quality
assurance standard. Developed from the QBE ‘Professions Series’ quality assurance framework, which itself is based on the ISO 9001 model, the
questionnaire is designed to provide you with a tool to review your management structure and processes – an exercise that will assist both insurers and
insureds to assess risks and act accordingly.

QBE is committed to the continued development of both service and market understanding to assist clients through today’s challenges in business. This
initiative underlines our long-term commitment to the professional indemnity market for financial services intermediaries and to helping our insureds
achieve high standards in their quality assurance and risk management processes.

About QBE
QBE Insurance Group is one of the world's leading international insurers and reinsurers, headquartered in Sydney, Australia. We operate out of 45
countries across the globe, with a presence in all key insurance markets and are lead underwriters within our chosen markets, setting rates and
conditions. For the year ended 31 December 2007, the company underwrote gross written premium totalling AU$12,406 million and held shareholders’
funds of AU$8,479 million.

Since 1981, QBE Insurance Group has successfully completed 100 acquisitions; including the high profile acquisitions of Limit Underwriting plc in 2000
and Praetorian Financial Group and Wintherthur US in 2007.

The Group consists of three geographically focused operational divisions: European Operations, based in London, the Americas, managed from New
York, and the Australian Pacific Asia operation - managed from Sydney.

QBE in Europe
QBE’s European Operations, which accounts for 42% of QBE Group turnover, is a leading specialist in London market and European commercial lines
business. QBE offers considerable diversity to the broking community; active in both the Lloyd’s and company market. QBE operates eight product-
focused underwriting divisions: - casualty, QBE Re Europe, property, motor, marine & energy, specialty, aviation, all of which have the ability to write on
both Lloyd’s and company market paper; and British Marine, the P&I specialist. In addition to the London market, QBE operates from seven UK-regional
centres and has a presence in 15 European countries.

Appetite for Risk
QBE is known throughout the market for its healthy appetite for risk and willingness to work flexibly in partnership with brokers. From policy inception to
claims settlement, the QBE approach is to use our market expertise to understand the needs of the individual client. Then we tailor our solutions to fit
those needs. We don't believe that one size fits all or that we should follow what other insurers do, which means we are always willing to take a view on
specialist risks.

Ratings
Standard & Poor's insurer financial strength and counterparty credit rating for QBE's main insurance subsidiaries is A+ (Stable). Fitch Ratings insurer
financial strength rating for QBE's main underwriting subsidiaries is A+, and the agency has also affirmed a long-term credit rating at A. Their outlook for
all ratings is Positive. A. M. Best assigned the financial strength rating of the QBE Group of companies A (Excellent).

All figures are correct as at 31 December 2007.
For more information on QBE Casualty, please visit our website www.QBEeurope.com/casualty.

2 FREQUENTLY ASKED QUESTIONS

What is the standard and why does QBE use it as a performance benchmark?
The Professional Management Standard: Insurance, Mortgage & Investment Intermediaries is one of the QBE Professions Series. Written specifically
for brokers, it is growing in acceptance as an effective standard for the industry. The standard is used as the platform on which to develop this
questionnaire as a risk management tool because it addresses all the main causes of claims against brokers. In addition, the standard covers specific
procedures for assessing and managing risk within your organisation.

Is the standard relevant to smaller firms?
The standard was originally completed and introduced in 2005. A key part of the development programme was to ensure that the standard is of equal
value to organisations of all sizes. Whilst the same goals must be achieved by all firms, a smaller business will have less-complicated structures and
fewer people involved in its risk management processes and so its systems and controls can likewise be simpler.

A good deal of the QA process, especially in relation to high PI risk factors, is concentrated on organisation’s contractual activities and client care.
These are the day-to-day operational aspects of business management that are of vital importance in terms of mitigating losses and therefore, the
requirements are homogenous regardless of the size of your organisation.

The standard and questionnaire have had two major upgrades - one in 2006 and another early in 2008 to take account of MiFID, the TCF theme, and the
changeover to principles-based regulation and the corresponding changes to the FSA rules. Our upgrade process takes into account any feedback
received from insureds and compliance advisers and as a result we have added further guidance and additional 'N/A' options for smaller firms and sole
operators to ensure that as far as possible, the requirements remain relevant to all types and sizes of business.

Why would QBE like us to complete a questionnaire?
QBE’s approach to underwriting is based on knowledge and understanding. By completing the questionnaire, you will help us to both better understand
your organisation and make more informed underwriting decisions when servicing your business. However, please be assured that your completed
questionnaire does not form a part of the contract of insurance.

How long will it take to complete?
You are invited to complete the standard form first. (questions are coloured yellow) This is an extract from the comprehensive form containing
questions relating to key business management issues that influence your exposure to negligence claims. We estimate a completion time of 1½ - 2
hours for this part of the questionnaire.

You can then elect to complete the comprehensive form which provides an evaluation of your overall business management standards against the full
standard. We estimate a completion time of an additional 1½ to 2 hours for this part of the questionnaire.

How will I benefit?
You will receive a written report showing your responses to the questionnaire and QBE’s findings based on the criteria contained in the standard. A
detailed checklist will assist you in addressing issues that might require attention and a feedback process enables you to submit changes that you
implement as a result of this process. The process and reports are free of charge - a health check of this nature and complexity could cost as much as
£3,000 from an independent consultant.

Your report will also include a TCF summary which maps each of the risk elements in the questionnaire to one or more of the six TCF outcomes as
follows:

l Customers* can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.

l
Products and services marketed and sold (in the retail market) are designed to meet the needs of identified consumer groups and are
targeted accordingly.

l Customers are provided with clear information and are kept appropriately informed before, during, and after the point of sale.

l Where customers receive advice, the advice is suitable and takes account of their circumstances.

l
Customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable
standard and also as they have been led to expect.

l Customers do not face unrealistic post-sale barriers imposed by firms to change product, switch provider, submit a claim, or make a complaint.

* FSA terminology for these outcomes refers to consumers rather than customers indicating regulatory application to retail customers only. However, as
our approach to risk assessment aims to be as holistic as possible, we believe that these principles should apply to all customers (as relevant)
regardless of their retail, commercial or professional status, and we have therefore used the term customer rather than consumer and bracketed the term
(in the retail market) for TCF 2.

You will be able to use this summary to identify TCF gaps and subsequently chart your progress as you implement the corresponding recommendations.
This will assist in demonstrating your commitment to embedding TCF into all aspects of the firm's operations, management and culture.

If my firm demonstrates that it has good practice management standards, what can I expect from
QBE?
QBE rewards good management practices. Our underwriters take the results of the quality assurance process fully into consideration when setting
premiums. We seek to provide our preferred clients with discounts from the standard rating model developed for this insurance portfolio.

What will happen if my firm is seen to have poor practice management standards?
It is important to note that our approach is not to reprimand but to reconcile. You will be asked to provide confirmation that the recommendations made
in our report have been implemented. Recommendations are prioritised according to whether we perceive them to be high, medium, or low risk in terms
of the likelihood of leading to a PI claim. Each level of risk has a recommended timescale for completion for you to follow.

Implementation of the recommendations is designed to help you improve your practice management standards over time and thus reduce the likelihood
of claims for our mutual benefit. Your underwriter will be updated of your progress on implementing the recommendations.

How do I feed back information to you regarding our progress in addressing recommendations?
As mentioned above, the report you receive will contain a checklist which provides you the opportunity to submit to us the changes that you implement.

What if we already have a QA Standard?
If you have a QA standard, then you will probably already comply with the vast majority of the requirements in the questionnaire. You are still likely to
benefit from completing the comprehensive version of the questionnaire however, as it brings together the requirements of various standards, some of
which you may not have considered with a single QA standard approach.

Thank you for your participation.

The author of this Questionnaire is QIEL. The author of this Questionnaire is protected under the UK Copyright law and under the relevant international
treaties and conventions. Copyright vested in QBE Insurance (Europe) Limited.

QBE European Operations is a trading name of QBE Insurance (Europe) Limited, no.01761561 ('QIEL'), QBE Underwriting Limited, no. 01035198
('QUL'), QBE Management Services (UK) Limited, no. 03153567 ('QMSUK') and QBE Underwriting Services (UK) Limited, no. 02262145 ('QSUK'),
whose registered offices are at Plantation Place, 30 Fenchurch Street, London, EC3M 3BD. All four companies are incorporated in England and Wales.
QIEL and QUL are authorised and regulated by the Financial Services Authority. QUL is a Lloyd's managing agent. QMSUK and QSUK are both
Appointed Representatives of QIEL and QUL.


YOUR DETAILS

Your PI Broker

Your Name:

Date:

FSA Firm Reference No:

Company Name:

PLEASE PROVIDE AN APPROXIMATE SPLIT OF YOUR BROKING ACTIVITIES:
Personal % Commercial %
A. General insurance (including pure protection products)

B. Life, Pensions & Investments (including long-term care products)

C. Portfolio / Wealth Management

D. Home purchase / reversion products

Activities Must Equal 100%

May we contact you in case of queries? Yes No


MANAGEMENT SYSTEMS
MS1 Do you have an office manual / handbook or intranet site that details your firm's management policies and operational processes by which
you manage your business and provide services?
G: You may have a compliance manual for FSA purposes but unless all aspects of your business where risks occur are covered, it would not
be considered comprehensive in quality assurance terms. APER Principle 5 requires in any case that "An approved person performing a
significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled
function is organised so that it can be controlled effectively" and a manual / intranet or other management material will help in this regard.
Sole operators should consider the development of a short handbook for business continuity purposes to facilitate management of the
business in the event of unplanned absence due to illness or other unforeseen events.

Treating Customers Fairly Indicator Œ Yes No

MS2 Do any personnel who work for you have ready access to these policies and procedures?
G: This may be via access on a shared drive or availability of hard copies at specified locations. Again, sole operators should consider how
access would be facilitated should events dictate that they were suddenly unable to continue to work.


MS3 Do your policies and procedures cover:
• organisation and management responsibilities;
• strategic / forward planning;
• financial management:
• prevention of financial crime;
• personnel management and supervision;
• premises and facilities;
• information technology and communications systems;
• business continuity and disaster planning;
• service delivery processes and standards;
• treating customers fairly (TCF) objectives;
• outsourced activities (e.g. marketing, IT support, compliance advice, telesales, claims handling, security, data management and other key
supply services);
• complaints procedures;
• risk management?
G: Risk management in this context refers to the holistic risk in providing financial services and in managing your firm overall. Completion of
the comprehensive version of this questionnaire will help in your assessment of this. Separate manuals may be used for different procedures
- for instance some firms have separate 'SYSC' (Systems and Controls) and 'TC' (Training and Competence) handbooks. Procedures should
include specific targets where appropriate such as target times for issuing documents, dealing with claims, handling complaints, correcting
errors, etc. Such targets will also support your TCF objectives and metrics.

Treating Customers Fairly Indicator Œ All Some None

MS4 Are all personnel advised of relevant communication channels and encouraged to make suggestions for improvements to the firm's policies,
procedures and supporting documents?
G: This could be via an annual review, staff / team meetings, suggestion box, e-mail etc.


MS5 Are all policies and procedures reviewed at least annually to identify areas for improvement and updated where necessary?
G: A full audit of all processes should be undertaken to look at compliance with the procedures defined in the Office Manual, identify areas
for improvement, and provide personnel with a further opportunity to suggest improvements. Those responsible for auditing your processes
should be competent and where possible, independent of the area being audited to ensure objectivity. Audit frequency should be risk-based
according to the likelihood of service failure or other risk management issues.


MS6 Have amendments to the policies and procedures been recorded and dated so that personnel can see what changes have been made and
when?
G: Some form of revision history record should be used for this purpose. More extensive or important changes might need to be explained
via a circular or at a briefing session or meeting.

Treating Customers Fairly Indicator Yes No


MS7 Are all such documents identified with its issue status (version number and/or issue date)?
G: So that previous versions are not used by mistake. Superseded versions should be discarded and/or marked obsolete.


MS8 Do you have a system to ensure that those who work for you are placed under a continuing obligation to comply with your policies and
procedures?

NB: The N/A option may only be selected if you are a sole operator.

Treating Customers Fairly Indicator Yes No N/A

MS9 Are important operational precedents including all customer-facing literature subject to document control processes that include:
• design, approval, and revision by competent, approved personnel;
• immediate and effective withdrawal of out-of-date versions to prevent inadvertent use;
• clearly marked document and version identities linked to an issue control list/database;
• appropriate read-write access, print and issue controls?
G: Such documents will include but not be limited to: financial promotions, disclosure documents, terms of business, some suitability
precedent letters, and scripts for use in marketing and non-advised sales processes. Firms should identify their own list of similarly important
documents and ensure these are subject to the document control processes above.

Treating Customers Fairly Indicator Œ Ž All Some None

MS10 Have you established record keeping requirements and retention periods for all records necessary to demonstrate effective operation of both
your service delivery processes and support functions?
G: SYSC now only requires that records should be retained for "as long as is relevant for the purposes for which they are made", although,
the minimum retention period for MiFID business is 5 years, extended to indefinitely for pensions including transfers, opt-outs and FSAVC
business. Firms should therefore develop a risk-based schedule of records to be kept, their retention periods and the person/s with authority
to arrange disposal or destruction. Personnel should be made aware of record retention policies as appropriate to their work.



ORGANISATION & STRUCTURE
OS1 Is there a written description of your management structure that shows clear lines of responsibility, e.g. a family tree or organisation chart?

NB: The N/A option may only be selected if you are a sole operator or if only Partners work for the firm and their reporting relationship is
defined in the Partnership agreement or equivalent.

Treating Customers Fairly Indicator Œ Yes No N/A

OS2 Have you allocated and defined management responsibilities for:
• ensuring compliance with legislative and regulatory requirements;
• liaison with the FSA, including full disclosure and prompt, accurate RMAR reporting;
• financial management, client money management, and prevention of financial crime;
• risk assessment and management;
• assessing TCF adherence and implementing appropriate policies, controls and metrics;
• systematically monitoring relevant information and guidance produced by government, regulatory, professional and trade bodies;
• implementation and maintenance of your management systems;
• provision of timely, accurate and meaningful management information;
• complaints procedures, handling and reporting;
• personnel management including recruitment, induction, training and competence;
• audits of your entire management system;
• if appropriate, overall responsibility for the firm's insurance mediation business;
• allocation and oversight of all management functions listed in this question?
G: Each of the above aspects / roles should have representation or be addressed at management / board level. In smaller firms, one person
may undertake several roles.

NB: The N/A option may be selected if you are a Sole Operator with no employed or contracted personnel that might undertake these
management roles.

Treating Customers Fairly Indicator Œ All Some None N/A

OS3 Does each of the roles in OS2 have clearly defined terms of reference and/or objectives and the individuals concerned, the competence and
capacity to fulfil these roles effectively?
G: Possibly defined in a Job Description or Management Role. Appropriate management training should be considered to ensure the
necessary competence for these roles. Even for sole operators, identification of key management tasks might assist in ensuring key weekly,
monthly, quarterly and annual management tasks are carried out promptly.


OS4 Do you have regular partners’ or management meetings for which agendas are produced and minutes or notes recorded and circulated?
G: For example, monthly, bimonthly or quarterly meetings of all available partners / managers or a committee appointed to deal with
management issues such as finances, planning and risk management, compliance, achievement of quality standards (including TCF), review
of industry developments (including information and guidance from recognised sources), third party performance, complaints, personnel and
administration. Management Information required for such meetings should be defined and must be timely such that effective decision
making based on current information can be undertaken. It is essential that where problems are identified, the corrective measures agreed
at such meetings are recorded and monitored to ensure the action is taken and more importantly, is shown to be effective. Sole operators
should take time out to review such issues and notes would reflect their personal action points.


OS5 Do you adhere strictly to supervision levels and processes that have been established for your personnel and/or products?
G: This could be for each individual or type of role, individual product types, for instance all high-risk product recommendations requiring
supervisory checks before issue. Supervision may be conducted in teams or on a one-to-one basis but in any event should be conducted at
a risk-based frequency and consider issues such as sales vs. targets, quality of advice / file review feedback, complaints and other customer
feedback, achievement of KPIs and development objectives etc. Supervision in respect of ARs is dealt with later in this questionnaire. There
is no N/A option as even sole operators should consider peer review or independent compliance checks for their work.



OS6.1 Have you defined the competence levels for supervisors in relation to: -
i) technical knowledge?
G: This may include specific qualifications, experience and practical skills. Care should be taken not to breach age discrimination legislation
and this can be achieved by specifying the required attributes rather than length of experience or other age indicators.

NB: The N/A option may only be selected if your business model does not involve supervision of less-experienced personnel.


OS6.2 ii) supervision skills?
G: Those that have technical experience do not necessary automatically make good supervisors as different skill sets are required for each.
Supervision requires skills in effective delegation, leadership, coaching, counselling, mentoring, assessment, feedback etc., and these should
be addressed as part of the recruitment, induction and development processes. There is no N/A option for this question as even sole
operators require self-supervision skills such as time management, CPD planning, objective review skills etc.



FORWARD PLANNING
FP1 Do you have a forward plan for business development that addresses key issues and objectives
including:
• overall strategic plans;
• marketing and promotion;
• IT, communications, and other aspects of your business infrastructure;
• management, supervision and staffing;
• skills and training;
• essential resources in terms of people, finance, premises, and facilities?


FP2 In developing the plan, has consideration been given to:
• the firm's strengths and weaknesses and its opportunities and threats ('SWOT' analysis);
• political, social, economic, technological, legal, and ethical issues and other trends likely to impact upon the firm ('PESTLE' analysis);
• aspirations of the partners and other personnel;
• the provision of timely, accurate and relevant management information;
• feedback from clients about their future needs and perceptions of the firm and services?
G: Business development plans must always be reviewed in light of quality and risk management objectives such as TCF goals to ensure
that any likely detriment to customers is minimised. Information such as the FSA's 'Financial Risk Outlook' document might also be useful
background information for development purposes.


FP3 Are the development plans and projects detailed in your business plan fully costed?
G: That is, outline costs identified for each development initiative so that these can be included in the firm’s income and expenditure budget
for the same period.


FP4 Does the plan address at least a three-year period?
G: The current year should be in detail but the following two years could be in outline only.


FP5 Has everyone who works for your firm been made aware of the contents of the plan?
G: Either via a summary document or provision of a copy of the plan itself (as appropriate to the level of understanding and role of the
individual). Group or individual presentation / discussion of the plan's objectives and how these tie in to individual and team goals should be
undertaken.

NB: The N/A option may only be selected if personnel are not employed or contracted.


FP6 Is the business plan subject to regular monitoring to assess and record whether it is on target to achieve the objectives set, and to agree
appropriate actions to progress the plans further?
G: For example, via regular meetings of the partners, management team or possibly a small committee established for this purpose.
Monitoring and review will be most effective if the goals defined are SMART i.e. Specific Measurable, Achievable, Realistic, and Time-
related. Use of pertinent management information (MI) such as sales achievements against targets, products not-taken up, cancellations
and lapses will assist in assessing both commercial success and achievement of your TCF goals.


FP7 Is the plan subject to full review and update at least annually to take into account changes in the business environment and to ensure the
planning horizon remains at three years?
G: This would include a reassessment of the factors listed in FP2 and update of the document to include new development initiatives.



FP8 Do you have a documented business continuity plan which addresses risk assessment, risk avoidance, pre-'disaster' planning, incident
handling and recovery?
G: Impact events for consideration include fire, flood, electrical failure, terrorism, computer viruses, hackers, faulty maintenance, pandemics,
long-term illness of key personnel etc. Sole operators should consider how their business would be managed if they were take ill
unexpectedly such that work was impossible. Contingency plans should consider IT and data restoration, communications, premises,
facilities, equipment, personnel, insurance issues, and the implications for clients and outsourced services. Consideration should be given to
TCF principles when planning continuity arrangements.


FP9.1 Has the business continuity plan been:-
i) reviewed within the last 12 months?
G: To consider whether the plans in place are still appropriate.


FP9.2 ii) tested within the last 12 months?
G: Testing may be limited to specific areas such as data retrieval and restoration on the basis of cost-benefit analysis. If tested, building
inaccessibility should be attempted with little or no warning for a true test of efficacy (in the same manner as for fire evacuation tests).


FP9.3 iii) updated where necessary and relevant personnel advised of the changes made?



FINANCIAL MANAGEMENT
FM1 Do you have an annual budget for both income and expenditure?
G: The budget should only be finalised once all projects in the business plan have been agreed upon and costed so that it is as accurate as
possible (see also FP3).


FM2 Is the budget produced prior to, or near to the start of your financial year?
G: Management Information on variances must be current so figures need to be in place at the start of new budgeting period.


FM3 Do you produce variance reports of actual income and expenditure compared to the budget?
G: Budget variance should be monitored at least quarterly but preferably monthly at management level so that any corrective action
measures necessary can be agreed and acted upon promptly.


FM4 Do you produce a documented cash flow forecast for at least the same 12-month period?


FM5 Do you produce variance reports of actual cash flow compared to the forecast?
G: Cash flow variance should be monitored at least quarterly but preferably monthly at management level so that any corrective action
measures necessary can be agreed and acted upon promptly.


FM6 Are both income and cash flow variance reports subject to regular review to monitor performance?
G: This would be monthly or quarterly for review at Partnership / Management level.


FM7 Have you established other key financial reports, data or financial ratios or indicators that you require to monitor the financial health of the
firm and are these also subject to regular review by management?
G: It is for your firm to decide what indicators might be useful but these might include for instance, individual or team performance figures,
cost-centre analysis, and sales volumes vs. targets (the latter of which might be used as a TCF indicator), conversion and lapse ratios as
well as overall indicators such as liquidity ratios. Capital adequacy checks as required by either MIPRU or PRU-INV should be included as a
key indicator (see also FM9). RMAR data should be checked monthly in any case.

Treating Customers Fairly Indicator Œ Ž Yes No

FM8 In respect of your debtors and creditors, have you defined systems and responsibilities for:
• monthly review of aged debtor and creditor reports;
• payment of premium and other debtors in accordance with agreed terms;
• premium, fee, commission and creditor management with fair methods of pursuance;
• write-off of bad debts after a defined period by authorised personnel only?
G: Loans / credit afforded for premiums owed may only be given on non-statutory trust accounts. If credit is given, non-payment of fees or
premiums might indicate some form of dissatisfaction with the service/product or could indicate the risk is not on cover, both of which should
be investigated.


FM9 Is your capital resource monitored at management level and independently audited at least annually?
G: Capital Adequacy Requirements are defined in MIPRU 4.2 (General Insurance and Home Finance Mediation) and PRU-INV 13
(Investment Firms).

Treating Customers Fairly Indicator Œ ‘ Yes No


FM10 Is the scope and cover of your Professional Indemnity Insurance (PII), or comparable guarantee, reviewed at least annually taking into
account:
• regulatory minimums;
• the financial products and services provided;
• customer / client groups;
• broker / insurer advice;
• recent claims / notifications;
• market trends?
G: Review might be conducted as part of the annual PII brokerage / renewal process. Regulatory minimums are defined in MIPRU and
PRU-INV however firms need to assess the exposures faced from their own client base, transactions undertaken and other knowledge.

Treating Customers Fairly Indicator All Some None

FM11 Are your accounts independently audited (or otherwise verified if you are audit-exempt) each year?

G: The requirements and exemptions are explained in SUP 3 of the FSA handbook. Firms that handle client money cannot be exempted
based on the size of the firm and Ltd. Companies and LLPs must have an independent audit in any case. Even if an audit is not a legal or
regulatory requirement, firms should consider independent verification of their finances as a sound risk management measure.


FM12 Do you have controls in place to review the suitability of your chosen bank(s) for the firm's money, and if held, client money?
G: 'Suitability' in this context should include both service standards and financial stability. Such factors should be taken into account if
changing / appointing new banks in future. The FSA has published on its website a list of suitable banks for use by those firms it regulates.
Particular care should be taken with foreign and off-shore banks and diversification should be considered if the amounts held warrant such
action.

Treating Customers Fairly Indicator ‘ Yes No

FM13 Have you established the necessary reporting systems to comply with RMAR and regulatory breach reporting requirements?
G: It is important to record information centrally so that analysis can be undertaken and information can be provided promptly when
requested by authorised bodies such as the FSA. Content and deadlines should be strictly adhered to otherwise regulatory breaches will
occur. The FSA must be notified immediately if professional indemnity or capital adequacy requirements cannot be met.

Treating Customers Fairly Indicator ‘ Yes No


CLIENT MONEY
CM1.1 What arrangements do you use when dealing with client money:
i) risk transfer (covered by written agreements with insurers) for all business conducted;
G: Questions CM2 - CM9 largely reflect FSA requirements. If required, further details should be obtained from the Client Assets Sourcebook
(CASS).

Questions CM1.2, 1.3 and 2-9 are N/A if all of the business you conduct is covered by risk transfer.


CM1.2 ii) statutory trust client account/s;
G: Your FSA permissions must reflect this. Question CM3 is N/A if you answer "Yes" to this question.


CM1.3 iii) non statutory trust client account/s?
G: Your FSA permissions must reflect this. Question CM3 is N/A if you answer "No" to this question.


CM2 Do your firm's client money procedures define the following essential elements:
• establishing the appropriate client accounts and receiving written notification from your bank regarding the status and identification of those
accounts;
• ensuring that the appropriate level of capital is held as security;
• handling and holding of client monies by employees, representatives and ARs;
• payments into and out of client bank account(s);
• dealing with receipt of client entitlements (e.g. claims payments) including prompt notification and allocation;
• handling of mixed remittances and withdrawal of non-premium amounts;
• client account calculation, reconciliation and verification to the bank statement and correction of discrepancies as soon as possible;
• clearly defined policies for charging, transfer of client monies, treatment of interest to which informed client consent is obtained;
• withdrawing your commissions;
• net account settlement with insurers;
• dealing with unclaimed client monies?
G: Full details can be found in the Client Assets Sourcebook (CASS) and relevant Prudential Standard for your firm. It is essential to ensure
you have a written acknowledgment from your bank and that the contents accurately describe the status of the accounts for your firm.

Treating Customers Fairly Indicator ‘ All Some None N/A

CM3 Have you in informed your clients about the operation and risks of a non-statutory trust account and obtained consent from relevant clients
for the use of such an account when dealing with their money?
G: CASS 5.4 describes the requirements for operating a non-statutory trust account and the contents of the trust deed that must be in place.

Treating Customers Fairly Indicator Ž ‘ Yes No N/A

CM4 Is there a nominated Partner/Director with responsibility for ensuring processes are kept up to date in line with changes to Client Money
Rules and formal guidance on the subject?
G: Day-to-day duties may be delegated but overall responsibility must still rest with the nominated Partner/Director.

Treating Customers Fairly Indicator Œ ‘ Yes No N/A

CM5 Are the up-to-date Client Money Rules and supporting guidance available for reference by all personnel involved in client money
transactions?


CM6 Have those responsible for dealing with client monies had specific training in respect of this activity?



CM7 When client money is received, is it:
• recorded in a manner that ensures traceability to an individual policy number or other unique identifier;
• banked or forwarded to a separate Accounts function for depositing and management;
• banked or forwarded within 1 working day once received at your office;
• forwarded no later than 3 working days once received from clients by any field-based personnel / ARs?

Treating Customers Fairly Indicator ‘ All Some None N/A

CM8 Have any issues raised by your Auditor in respect of either client money processes or amounts held, been remedied or otherwise addressed
and where appropriate corrective action measures put in place to prevent reoccurrence of similar problems?

Treating Customers Fairly Indicator ‘ Yes No N/A

CM9 Have you in place the necessary controls to immediately inform any clients affected and the FSA, in the event that you are unable to perform
any client account calculations, reconcile accounts or make good any shortfall within the 25 day regulatory target?

Treating Customers Fairly Indicator Œ Ž ‘ Yes No N/A


PEOPLE MANAGEMENT
PM1 Are pre-recruitment controls in place such that agreed policies in relation to the following are understood and followed:
• responsibility for co-ordinating the recruitment process;
• review of the job role and person specification and update if necessary before release;
• authority to promote the role and its associated benefits via appropriate channels;
• selection and approval of any recruitment agencies used?
G: Person specifications should always be reviewed before advertising to ensure that the stated qualifications, skills and experience reflect
the overall competency level required to provide the firm's customers with quality advice and/or service. Care should be taken not to breach
age discrimination legislation.

NB: The N/A option may only be selected if there are no staff and the business plan indicates that recruitment of personnel (staff or partner
level) is not likely in the near future. *'Partner level' includes directors, co-owners or other senior / equity management roles.

Treating Customers Fairly Indicator All Some None N/A

PM2 Are selection processes robust, objective and transparent such that the following can be demonstrated:
• initial review of all applicants against the person specification;
• short-listing or rejection based on meeting the criteria in the person specification;
• communications with all candidates regarding their success or failure to meet the criteria;
• interview against set criteria including appropriate tests/measures to assess competency;
• final selection based on achievement of the best results overall;
• communications with interviewees to discuss an offer or reject their application?
G: Whilst recruitment processes must be fair and transparent, the key objective is to ensure the process is sufficiently robust such that only fit
and proper people are employed by your firm.

NB: The N/A option may only be selected if staff are not employed and the business plan indicates that recruitment of personnel (staff or
partner level) is not likely in the near future.


PM3 Are records retained of all selection stages showing clearly why candidates were accepted or rejected?
G: This is to assist in any potential claim of discrimination or request for feedback. Such records should not be retained more than 12
months in accordance with data protection rules.



PM4 Are each of the required competencies to fulfil the job role verified as part of the selection process and records of such verification stages
kept?
G: This might be via interview, verbal, written or computer-based testing etc.



PM5 Are copies of certificates obtained to prove achievement of education and qualifications?



PM6 Are references always obtained prior to the appointment of new personnel?
G: References spanning 5 years, and a 10 year (or complete) employment history obtained. Any gaps in the employment history should be
investigated. FSA approval should never be relied upon in place of your own due diligence.




PM7 Are fitness and propriety checks undertaken in appropriate circumstances and records of such checks retained?
G: This is to address financial soundness and criminal background checks to ensure that personal and financial circumstances and
perceived integrity are unlikely to impact upon performance. Whilst the process should be applied to all personnel via a process of self-
certification, additional background checks with the CRB or a credit reference agency might be undertaken for Appointed Representatives
and any other sub/contract personnel and business partners as well as all managers and staff directly involved in service delivery and/or with
access to large amounts of customer data. Particular attention should be given to offences of dishonesty, fraud, financial crime or other
offences under legislation relating to banking and financial services, company law, insurance, and consumer protection.

NB: The N/A option may only be selected if staff or third parties are not employed and the business plan indicates that recruitment of
personnel (staff or partner level) is not likely in the near future.


PM8 Are there set processes, checklists and records of induction training and where appropriate, skills verification, for (as appropriate):
• new employees;
• employees returning to work after a long absence;
• employees changing roles?
G: Apart from the routine administration of the first day, induction should cover all key policies and processes and should therefore be spread
over a suitable period. Skills that cannot be fully assessed during the selection process should be verified, for instance via supervised
customer visits/ interviews, to see if further training is needed.



PM9 Is any testing / verification performed during or after induction to ensure that individuals have understood the policies and procedures they
are required to abide by?
G: The benchmarks / criteria used to verify competency should be defined and evidence recorded in the same manner as PM19.



PM10 Does each person who works for your firm (all employees, directors / partners and contract personnel) have a documented job / role
description or specification?



PM11 Is there a corresponding person specification that details the skills, knowledge, experience and/or competencies required to fulfil the role?
G: The person specification may be part of the job description or defined elsewhere, e.g. in a recruitment advertisement or recruitment
agency specification. Reference to the CII's or FSSC's Competency Frameworks may be useful in developing Job Roles or deciding whether
existing ones are adequate.



PM12 Are Job Descriptions / Management Roles reviewed at agreed frequencies to ensure they are kept up to date?
G: This review might be conducted, for instance, during an annual development review.




PM13 Does each person who works for the firm have an annual review to:
• assess their performance and agree targets for future performance;
• assess understanding of key policies and any interim changes made;
• consider any changed circumstances that might impact upon their suitability for their role and update corresponding declarations on fitness
and propriety;
• look at achievement of objectives and to set new objectives;
• identify training and development activities necessary to achieve the objectives set?
G: Individual objectives should support overall business objectives in terms of growth, development, risk management, quality, TCF etc.
Changed circumstances relate to fitness, propriety and suitability generally such as changed personal/financial circumstances that might
impact upon a person's performance - self-certification and background checks as considered appropriate should be repeated taking care
not to fall foul of discrimination laws. The individual's ethical behaviour should be considered in any case as part of their overall
performance. Training and development principles apply to all partners, directors, managers and staff including sole operators. All aspects
need not necessarily be addressed during one review if other review processes are in place, for instance a separate review to consider CPD
requirements and achievements might be in place. Reference to the CII's or FSSC's competency frameworks may be useful in deciding
which competencies are necessary for the role.


PM14 Are confidential records of the reviews produced, detailing agreed actions relating to each aspect listed in PM13?
G: The Data Protection Act requires such details to be kept confidential and made only available to authorised personnel. Under this Act,
individuals may also request to see copies of records on file about them at any time.


PM15 Do you monitor the performance of all individuals between annual reviews and identify measures to maintain competency where necessary?


PM16 Are training and development plans and controls in place to ensure that:
• all individuals are trained and developed to fulfil their role effectively;
• training and development is appropriate to the job role;
• training is implemented in accordance with required timescales;
• management, supervision and support skills are attained as well as operational competency;
• personnel understand the policies and procedures they are required to abide by;
• compulsory CPD is attained in appropriate circumstances;
• the company has the necessary skills overall to fulfil its business objectives?
G: It is important that training plans are developed with the aim of achieving strategic and business goals and not just to fulfil compliance
requirements. Legal and regulatory understanding should extend to areas such as prevention of financial crime, health and safety law,
equality in the workplace, data protection and compliance with FSA rules including TCF principles.


PM17 Do you monitor the achievement of all training needs identified including compulsory qualifications (those defined by the FSA, FSSC or the
firm's own standards), and any firm-wide training mandates to ensure that they are undertaken within any defined time limits?
G: Training needs will be those identified during the annual development review and apply to all sizes of firm including sole operators.
Company wide mandates might apply for instance to tax and benefits updates whereby an annual briefing for all staff is mandated to take
place promptly following annual budget announcements.


PM18 Do you evaluate any training undertaken to ensure that it has achieved the required results:
• immediately afterwards to ensure that the necessary knowledge or skill has been gained; and
• after an appropriate period of time to ensure that the new knowledge or skills is being applied effectively and is having the intended effect
on the individual's performance?
G: This will also assist your firm in assessing whether its investment in training and development is cost-effective and contributing to its
business goals. Evaluation should be applied to induction training as well as ongoing training during the employment lifetime.



PM19 Are competency assessments recorded to demonstrate when competency was attained and what criteria / benchmarks were used to make
this assessment?
G: Competency assessments should be appropriate to the skills/knowledge being assessed. Written tests might be appropriate to test
knowledge but accompanied visits or interviews with customers would be more appropriate to assess both knowledge and practical skills.


PM20 Are comprehensive training and competency records kept for each person showing all external and internal training undertaken?
G: Training records should include all significant development activities - external courses, internal briefing sessions, cascade training etc.
related to the job role plus appropriate admin, IT, supervisory and management training. In-house testing and re-assessment should also be
applied in respect of key policies such as security, financial crime, whistle-blowing, TCF, data protection etc.


PM21 If personnel fail to meet the defined levels of competency required for their job are they subject to the following controls (as appropriate):
• closer supervision;
• additional training as necessary;
• change of / restrictions to job role;
• appropriate warnings;
• dismissal in extreme circumstances?
G: Care should be taken when following the disciplinary route to ensure that all legal requirements are fulfilled and appropriate records kept
in support. Advice from your solicitors or employment advisers in such circumstances should be sought where appropriate.


PM22 Do you regularly review remuneration policies and levels to ensure that they support overall business objectives and that there are no
adverse trends that might impact upon recommendations made to your customers?
G: The review should include comparison of sales personnel in terms of commission levels earned and risk carriers and/or products favoured
etc. Even where no commission or bonus structure is in place, consideration should be given to other benefits in kind that might impact upon
the choice of products and/or insurer. Such considerations might be included in a full review of Conflicts of Interest and TCF issues that
might apply and achievements that might be rewarded to support your firm's policies in this regard.


PM23 Do you have a 'whistle-blowing' policy which can be used by all people who work for or represent your firm?
G: Both for best practice and FSA purposes.


PM24 Do you have established channels that facilitate two-way communication between staff and managers?
G: This might include for instance, regular team, function, branch or whole company meetings, social events, use of e-mail / memos, notice
boards, suggestion boxes, intranet, etc.



PM25 Do communication channels or other forums include the systematic sharing of learning events including:
• cascading training undertaken by individuals;
• circulating guidance from regulatory, professional, and other authoritative bodies;
• sharing knowledge of disciplinary and court decisions against firms and individuals;
• informing relevant personnel about corrective and preventive action measures instigated to improve policies, processes, attitudes,
compliance and risk management in light of the above?




PM26 Do you have an up-to-date Equality and Diversity Policy that is reviewed at least annually and updated where necessary?
G: The principles of equality apply to the treatment of staff, Partners/Directors, clients and third parties and this should be reflected in the
Policy content and any supporting procedures. The annual review process should ensure that the policy is being implemented effectively
(see RM11).



INFRASTRUCTURE
INF1.1 Do you have documented policies and procedures to ensure compliance with legislation relating to:-
i) health and safety;
G: This includes training and consultation with staff, risk assessments and reports, controls for safe use of equipment and computers, stress
management, accident reporting, first aid arrangements, etc.


INF1.2 ii) fire regulations;
G: For example, ensuring that a current fire risk assessment is available, controls agreed and conditions complied with, fire alarm tests are
undertaken, emergency procedures are documented and understood, fire fighting equipment is regularly checked, etc.


INF1.3 iii) disability discrimination?
G: 'Reasonable adjustments' should have been made by October 2004 to ensure accessibility to your services by disabled clients and
employees. Firms need to consider accessibility of documents, information available electronically such as that provided via a website, and
telephone services including distance marketing and sales. As appropriate firms might need to have arrangements in place (outsourced if
necessary) to provide documents in large print and Braille for the visually impaired, have in place induction loops for the audibly impaired,
and ensure that any website has been assessed for compliance (freely available tools such as ‘Bobby’ are available for this purpose). If
disabled clients are provided with home-based services, charges should not be made.


INF2 Do you use one or more proprietary or tailored software packages designed specifically for the products you broker which deal with (as
appropriate to your work):
• precedent document management;
• product research;
• policy summary, key features document and illustration management;
• inception, adjustments and renewals;
• back office administration;
• claims handling;
• accounts management;
• retrieval and reproduction of documents;
• diary of key dates (for reviews, renewals etc)?


INF3 Do you have support arrangements in place for all hardware and software used in day-to-day business?


INF4 Do you have in place security measures and systems designed to prevent unauthorised access to your premises, any restricted areas, files
and data including:
• office / restricted area access via keys, key-codes or buzzers/intercoms;
• reception sign-in and out of all visitors with supervision / escorting as appropriate;
• locking filing cabinets containing customer/other confidential data when not in use and at close of business;
• having a clear desk policy to reduce the risk of data being lost, stolen or being seen by unauthorised persons;
• having written policies and procedures in respect of premises and data security;
• training all existing and new staff in your policies and procedures and the risks of poor security?
G: Installing alarms or CCTV may also act to deter intruders. Visitor arrival and departure records would also assist in the event of
emergencies if muster is necessary. Locking fire-proof cabinets will assist in preventing the spread of fire.


INF5 Are you registered under the Data Protection Act?
G: Registration details can be obtained from the Information Commissioner's website.



INF6 Is the data held by your Company reviewed regularly (at least annually) to ensure that it is up to date and used only in accordance with your
DPA permissions and with the data protection principles?
G: The eight data protection principles are listed in Schedule 1 to the Data Protection Act.


INF7 Are your computer systems and records subject to:
• controlled access rights;
• user name and password protection;
• virus protection;
• firewall/s;
• control and encryption of any data allowed to be stored on portable devices and home computers;
• control and encryption of any data transferred to third parties (and only where permitted), or use of secure internet links, registered or
recorded mail as appropriate;
• data copying prevention measures?
G: Access controls should be established at computer and programme levels at least. Further controls might be needed for certain sensitive
folders or files. Personnel should be trained on the importance of password structure, regular update and protection such as not sharing or
writing down. Encryption or other protection measures should be applied to data held on laptops, memory sticks, CDs and other portable
devices. A log of portable devices and encryption controls should be held to this effect and audited to check for losses. Prevention of data
copying might also be controlled by disabling USB ports and CD writers.


INF8 Are controls in place to:
• review and update controlled access rights;
• frequently change user names and passwords;
• review and update virus protection and firewall/s;
• assess the effectiveness of data security measures and update them as required?


INF9 Do you back-up all business-critical data daily?
G: If back-ups are conducted centrally, it is essential to ensure everyone stores their data in the correct area on the computer. Apart from
transactional records, data held on MS Office or equivalent and Accounts packages etc should also be subject to regular back-up.


INF10 Is back-up data produced, handled and stored in manner which prevents loss, theft, or damage?
G: Back-up data should be encrypted and stored securely such as in a fireproof or lockable safe, preferably off-site with a trusted member of
staff or third party. Such data should not be left in cars or unlocked briefcases / handbags etc and if entrusted to a third party, their storage
process should be verified before appointment.


INF11 Does your firm have a documented internet and email policy which dictates:
• acceptable and unacceptable uses of the internet and e-mail for both business and personal use;
• any monitoring systems in place;
• the action that will be taken in the event of a breach?
G: Best practice advocates that web-based e-mails, instant messaging, social networking sites and file sharing are blocked to prevent the
loss or theft of data without the firm knowing. Internet and e-mail access may not be necessary for all job roles and might be restructured to
reduce risks. If monitoring is employed, staff must be made aware of this in advance in line with the Employment Practices Data Protection
Code.



INF12 Do you have an outsourcing policy and supporting procedures that define the controls to be applied to the management of third parties with
access to data including:
• initial vetting to ensure adequate competence, capacity and if relevant, authorisation to perform outsourced functions;
• agreement of disclosure and reporting requirements having due regard for confidentiality and data protection law;
• agreement of monitoring requirements (by the firm, its auditors, the regulator and any other competent authorities as necessary);
• formal contracts in place for all outsourced service providers setting out the rights and obligations of each party;
• assessing the standard of performance of the third party against the agreed service level criteria;
• instigation of appropriate action should service standards fail to meet agreed criteria in a manner which is not detrimental to the continuity
or quality of service provided;
• as appropriate, establishment of business continuity arrangements, their review and testing?
G: SYSC 8.1.5 gives examples on non-critical services that might, for regulatory purposes, be excluded from such considerations Sound risk
management however advocates that these principles be applied in all cases but in a risk-based manner. Notification to the FSA may be
necessary where your firm intends to rely on a third party for the performance of a critical operational function (see SUP 15.3.8). The firm
remains overall responsible for compliance and risk management in such circumstances.

Treating Customers Fairly Indicator Œ Ž ‘ All Some None

INF13 Do you have controls in place to ensure equipment relied upon to provide your service is maintained in good working order?
G: Utility provision and business continuity should also be considered in this context.


INF14 Do you maintain a list/database of product providers for each type of insurance, investment and mortgage/home finance product you deal
with and is this available to relevant employees and representatives of the firm?
G: The same list/s could be used for issue to customers if requested in response to your disclosure that such lists are available for services
based on limited research.

NB: The N/A option may only be selected if you are a tied broker with one product provider.

Treating Customers Fairly Indicator Œ Ž Yes No N/A

INF15 In respect of the product providers you use, do you have set processes and supporting records for:
• vetting and selection against set criteria;
• establishing contracts and service level agreements;
• performance monitoring against set criteria;
• collecting data that contributes towards management information including TCF indicators;
• review of financial standing and any other risk assessments undertaken;
• regular update of their product details?
G: Product providers include those who develop, manage or package insurance or investment products, mortgages and home
reversion/purchase plans. Vetting and performance monitoring should be against specific quantitative and qualitative criteria that reflect your
firm's own quality standards such that customers can expect the same level of service from third parties as they would when dealing with
your firm directly. The criteria used should be recorded and evidence of benchmarking each product provider against those criteria retained.

NB: The N/A option may only be selected if you are a tied broker with one product provider.

Treating Customers Fairly Indicator Ž ‘ All Some None N/A

INF16 If a panel approach is used to address whole market coverage, do you review the panel at least quarterly in light of changing market
circumstances, customer feedback and performance monitoring information?
G: Criteria for inclusion on the panel should be defined and evidence of benchmarking against the criteria retained. Review should be
conducted at management level as part of your regular management meetings.

NB: The N/A option may only be selected if you are a tied broker.


INF17 Where product choice is from a restricted number of providers, are you able to issue a list of those providers to your customers if requested?

NB: The N/A option may only be selected if you are tied to one product provider.

Treating Customers Fairly Indicator Œ Ž Yes No N/A


INF18 In respect of any customer documents, information or other property entrusted to your care, do you have systems in place to:
• evidence the date received, and acknowledge receipt if requested;
• record the details and location (if relevant) of any such documents/property held ensuring traceability of such items to the customer;
• keep the property / information securely and in accordance with any conditions stipulated by the customer;
• use mandates, authorisations and other property only as instructed;
• only transfer data to another party if your firm has been given authority to do so and then apply appropriate security measures;
• notify the customer of any problems with their documents/property;
• return the items to the customer if requested/necessary or otherwise dispose of information securely;
• if appropriate, reconcile any custodial items in line with agreed frequencies?
G: Particular care should be taken with customer mandates and financial details. Fitness and propriety checks are essential for those to
whom such information and authority is entrusted.


INF19 Do you employ Appointed Representatives (ARs)?
G: Questions INF20-24 are N/A if you answer "No" to this question.


INF20 Do you have a written contract with your ARs stating that they must abide by:
• your management systems;
• agreed customer service standards;
• regulatory requirements;
• any commercial restrictions;
• if appropriate, client money controls including banking arrangements, risk transfer and subordination arrangements and authority to pay
claims or refund premiums;
• record keeping and submission arrangements;
• your T&C requirements including attendance of any training mandated by your firm;
• contractual requirements to notify you of other firms with which they work?
G: The firm should consider what records need to be held centrally for monitoring TCF adherence and so that in the event of departure of the
AR, valuable information is not lost and service standards are not adversely affected. You may also need to organise registration with the
FSA if the AR is not already approved. Failure to have contracts in place is a criminal offence and can result in imprisonment.

Treating Customers Fairly Indicator Ž ‘ All Some None N/A

INF21 Do you ensure the following suitability criteria are met, both at the outset prior to appointment of the AR and on a continuing basis:
• both individual and organisational competence to conduct the required tasks;
• financial solvency and soundness;
• reputation (in terms of criminal and disciplinary background checks)?
G: It is essential to ensure that in appointing ARs, TCF principles are taken into consideration so that customers can be assured of the same
level of service as if dealing directly with you. The firm should conduct its own due diligence tests and not rely on any prior FSA approval for
this and pre-joining visits to this effect are recommended. The firm should be satisfied that the T&C arrangements of the AR are at least
equal to its own such that its personnel policies do not pose an unacceptable risk to your firm.

Treating Customers Fairly Indicator All Some None N/A

INF22 Do you have a ‘multiple principal’ agreement in place with any ARs and IARs that work for other firms as well as your own making sure that
responsibilities are clearly apportioned?
G: Apart from this being a regulatory requirement, best practice dictates that roles, responsibilities and liability be clearly defined in respect of
the management of any shared resource such as an Appointed Representative. In particular responsibility for dealing with complaints should
be made clear so that customers are ensured fair and consistent treatment.

Treating Customers Fairly Indicator ‘ Yes No N/A

INF23 In respect of Introducer ARs (IARs), does the firm:
• verify the identity of the firm/individual;
• ensure their suitability to act for your firm (in terms of knowledge, ability, and good repute) and ensure that training is provided/undertaken if
necessary to achieve and maintain the necessary competency;
• establish a contract detailing the activities that the IAR is permitted to undertake;
• ensure the activities of the IAR are restricted to those detailed in the contract;
• if necessary, register the IAR with the FSA?

NB: The N/A option may be selected if you do not employ Introducers.

Treating Customers Fairly Indicator Ž All Some None N/A


INF24 Do you have a documented supervision structure, procedures and work schedule in place for visiting and monitoring the performance of ARs
and IARs?
G: The firm is responsible for the acts and omissions of its (I)ARs and therefore their supervision should be controlled to the same extent as
in-house resources. Those responsible for the supervision of (I)ARs must be sufficiently independent of them such that objectivity can be
maintained and conflicts of interest avoided.

Treating Customers Fairly Indicator Œ ‘ Yes No N/A


PREVENTION OF FINANCIAL CRIME
PFC1 Have you appointed a member of your Management Team to have overall responsibility for dealing with the prevention of financial crime?
G: Financial Crime includes insurance fraud, identity and credit card theft and money laundering. Various regulations apply including the
Money Laundering Regulations 2007, Proceeds of Crime Act 2002 and the Prevention of Terrorism Act 2005.


PFC2 Have you allocated adequate resources to support the Manager in this role?
G: This might include a Deputy, other staff such as a Money Laundering Reporting Officer and a budget for training.


PFC3 Have you raised awareness about financial crime within the firm?
G: Guidance should address recognition and reporting issues. Reporting systems should include the adoption of a whistle-blowing policy for
use in appropriate circumstances.


PFC4 Do you systematically review information from Government, regulatory, professional and or membership/trade bodies about financial crime
and assess its implications for your firm?
G: The nominated Manager or their delegate should monitor journals, press, websites and/or receive e-mail alerts from authorised bodies to
keep informed of developments and compliance requirements. Policies, procedures and training should be kept up to date accordingly.


PFC5 Do you conduct regular refresher training about financial crime?
G: Refresher training should be conducted at least every two years or as events and updates dictate. Training for new staff should be
provided as part of their induction process.


PFC6 Has the firm identified and defined the specific types of financial crime its business is at risk of, and introduced controls to deal with
suspicions of financial crime?
G: In developing control measures, consideration needs to be given to the cost-benefit relationship between detection and prevention costs
and actual losses. Guidance on insurance fraud can be obtained from the FSA website and on money Laundering from the Joint Money
Laundering Steering Group (JMLSG).


PFC7.1 Do you have processes in place for reporting and centrally recording concerns about financial crime: -
i) within the firm?


PFC7.2 ii) externally to the relevant Authorities?
G: Suspicions should be reported to SOCA (Serious and Organised Crime Agency) which has taken over this role from NCIS (National
Criminal Intelligence Service).


PFC8 If any reports are made to external authorities such as SOCA, are reply times monitored to ensure delays and blocks on transactions are
minimised?
G: SOCA reply standards for money laundering reports of 7 and 31 days should be monitored to ensure that blocks on processing
transactions are minimised.


Financial services intermediaries quality assurance and tcf questionnaire[fsa]

Financial services intermediaries quality assurance and tcf questionnaire[fsa]

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