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Updating your Compliance File

A reader recently asked how regularly one is obliged to review one’s compliance documentation. The answer appears to be: as and when required.

Interestingly, (or perhaps not surprisingly), it appears to be implied, rather than prescribed, that you should do so.

I obtained examples of some of the templates that Moonstone Compliance uses. The changes, compared to when I looked at this a year or two ago, is quite substantial. It is not only due to legal changes – practical matters arising from client feedback and Ombud determinations, amongst others,all contribute to the need to review your records on a regular basis.

The only reference to updating records that I came across appears in the 2012 compliance report for FSPs without a compliance officer. Question 12 deals with Risk Managementand question 12.3 reads:

“In a separate annexure, provide details of how the risk management plan is monitored.”

We all know that compliance forms part of the risk management plan. You should, by rights, therefore review documents like your formal disclosure letter and client advice record as part of your risk management functions.

We indicated on Monday that a safety net provided in last year’s compliance report falls away in 2013. The option of listing something as a “Developmental Area” will no longer be available. You either comply, or you do not.

At our compliance report workshop, Paull Lawrence indicated that stricter controls and heavier penalties are on the cards. The removal of the developmental area option seems to confirm this.

We foresee that Sole Proprietors, in particular, will experience problems staying up to date with the constant changes in the industry. To assist them, we have developed an affordable support service called Moonstone Protector. If you are interested, please speak to Deon du Toit or Theuns Swanepoel at 021 883 8000.

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