10 questions to ask before hiring a compliance consultant, plus the answers to look for

  1. “What experience do you have, does it match the type of business your firm undertakes?”

It’s crucial the expertise of your chosen compliance consultant matches the type of business your firm undertakes. For example, if you are active in the pension transfer market, have they passed AF3 and kept their own CPD up to date?

We would always recommend asking for at least two references, which you should take up.

We would also recommend asking for a CV and to see a copy of their Professional Indemnity Insurance, a consultant confident in their ability, and the results they achieve, should have nothing to hide.

  1. “What services do you offer?”

This is an obvious question, but is nevertheless important if you are to get the services you need.

It’s also worth delving a little deeper, to check that your definition of a task, for example a file review, mirrors that of the consultant.

Why not ask to see examples of their work? For example, a file review, with the personal details redacted of course, so you can review the quality.

  1. “How do you provide your support?”

The compliance consultant should be able deliver the support you need via your preferred method of communication.

They should work around your needs, not the other way around.

In this modern age, technology is your friend and should be used to deliver efficiencies in your business. For example, file reviews can often be completed remotely, with your compliance consultant login in to your back-office system.

On the other hand, other tasks, such as an annual audit, are probably better carried out face to face, in your office.

  1. What type of firms do you already look after?

It’s important to know that your consultant has experience of dealing with firms like yours.

Ask for references for firms like yours, with similar needs, then make contact and listen carefully to the feedback before making your final decision.

  1. Do you have Professional Indemnity Insurance in place?

We would recommend only doing business with a compliance consultant who holds adequate Professional Indemnity Insurance, just as you must do.

Ask to see a copy of their policy and read it carefully, exactly as you would do your own. If the consultant is unwilling or unable to provide a copy, alarm bells should start to ring.

  1. What locum agreements do you have in place?

There are pros and cons for using both small and large compliance consultancies. But, whichever you choose, you need to be comfortable that arrangements have been put in place to avoid any disruption in service.

This is especially important if you are dealing with a small consultancy. This can have its advantages as it often produces a more personal and bespoke service, but, arrangements must be in place for when the consultant is ill or on annual leave.

  1. What qualifications do you have? Do you undertake and record CPD?

Unlike financial advisers, there is no minimum qualification level for compliance consultants.

However, we would suggest that you look for your consultant to be qualified to at least Diploma standard and hold any qualifications necessary to check specialist advice; occupational transfers for example.

We would also expect the consultant to undertake and record relevant CPD, just as you must do; why not ask for a copy?

  1. Is the chemistry, right?

Your compliance consultant’s principle role is to help you manage risk in your business. To do this effectively there might be some awkward conversations along the way; you must be prepared for the occasional difference of opinion.

The chemistry between you therefore needs to be right. The relationship must be one of mutual respect and understanding for each other’s position.

In our experience, it quickly becomes clear in the initial discussions whether the chemistry between both parties is right and a long-term relationship can be built.

Go with your gut feeling though, it’s usually right.

  1. How long does it take to review a file and what percentage should be checked?

One of the key ways to manage risk in your business, especially if you have advisers working for you, is to review the advice being given.

We would recommend asking any potential consultant how long it takes to review a file. The answer will be interesting, too quick and you run the risk that they have only conducted a superficial review and mistakes could be missed, leaving your firm exposed. Too long and the cost will mount up.

You should also ask what they include in a file review, how much detail do they go into and what is the process for putting errors right?

  1. Are the fees realistic?

We’ve deliberately left this until then end; if the other factors aren’t right then there’s no point in even talking about fees.

The cost must be reasonable for the work undertaken and comparable to the consultant’s peers.

However, we would encourage you to see a compliance consultant as an investment in managing risk and building value in your business for the future.


The five most common questions we are asked about the authorisation process

The journey to direct authorisation is beset by myths and misconceptions.

Helping financial advisers and mortgage brokers obtain their FCA authorisation, is one of our key areas of expertise. Who better then to dispel some of these myths, whilst answering the most commonly asked questions?

#1: “What permissions do I need to apply for?”

That depends on several factors, but the key Controlled Functions are as follows:

CF1: Required if you will be a director of an authorised firm or will otherwise have a significant influence over it

CF4: Required if you will be a partner in an authorised firm

CF10: Compliance oversight function

CF11: Money laundering reporting function

CF30: Customer function; in other words, an adviser

Whilst these are the most common Controlled Functions others exist for other roles such as non-executive director.

If you would like to know exactly which you will need to apply for, please get in touch.

#2: “What will the FCA need from me?”

Just some of the documents the FCA will require to support your application are:

  • A business plan: In our experience this is probably the area advisers find most difficult. Business plans need to be comprehensive and demonstrate to the regulator your practice is financially viable. We help advisers produce a comprehensive business plan, which will not only aid their application, but also help from a planning perspective
  • A cashflow forecast: Again, this document is required by the FCA, but is also useful for the management team of the new business. We are experienced in helping firms put together a comprehensive cashflow, which will ensure their business is financially on track, as well as satisfying the regulator’s requirements
  • Organisational chart: This is usually a relatively simple requirement, showing who’s who in your business and the roles they undertake. Nevertheless, it’s important to get it right first time
  • Conflicts of interest: The FCA will expect you to provide full details of any conflicts of interest which may occur upon the authorisation of your new business
  • CVs for all directors: Again, a relatively easy requirement to provide, but another which will hold up your application if it is missed
  • Accounts: Existing businesses, for example those moving from a network, will need to provide up to date accounts with their application

In addition to the above, the FCA will of course need the appropriate application forms fully completed. We can help here too, checking the forms for completeness and highlighting areas where additional information may be needed; which of course could help reduce the time it takes for your new business to be authorised.

#3: “How do I submit an application?”

There are two stages to this process; building your application pack, followed by submission to the FCA.

Of course, you could do both tasks yourself.

However, we would naturally recommend that you consider using a compliance consultant, such as ourselves, to build the application pack. We have helped firms through this process on many occasions, whereas this is probably the first time you have done it. Our experience will help ensure the pack is more comprehensive on the first submission, saving time and getting you authorised sooner than may otherwise be the case.

#4: “How long will it take before I am authorised?”

This is the most commonly asked question and the hardest to answer!

The rule of thumb is between six and nine months.

The FCA has to give an answer within 12 months. In reality though, this period could be extended though, as the 12-month clock stops ticking when the FCA are waiting for your responses to their questions and queries.

That’s a long time and emphasises the importance of ensuring that the initial application pack is completed as comprehensively as possible. There is nothing as infuriating as a delay in your application, which could have been avoided.

#5: “What does it cost?”

An application fee of £1,500 is payable for a straightforward application.

The fee is the same, irrespective of the number of advisers within your business.

You should note though that the fee may be increased for complex or non-standard applications to between £5,000 and £25,000.

Naturally, we also make a charge to help advisers with their application. However, we would encourage our clients to see this as an investment rather than a cost. After all, if we can speed up the authorisation process, if only because the initial application will be more comprehensive, income into your business will start sooner than may otherwise have been the case.