Compliance is not an option

The words 'we are now solvent' suggest that, at some time in the past, you were not. This is a notifiable breach and, in addition, your accountants have a whistle-blowing duty as well.

It seems clear that the previous accountants were either not competent or just did not understand the Financial Services Authority rulebook. Since the beginning of regulation in January 2005, it continues to be the case that many accountancy practices simply do not understand the rules or what is required of them.

While the previous accountants have landed you in this position, remember that FSA regulation works by approved persons giving an undertaking to the watchdog that they will ensure compliance on behalf of the firm, so it is with you that the buck stops.

It is inappropriate to speculate over what action the FSA might take and, given that you are solvent now, it is difficult to predict what sanction the regulator will apply. From what you say, no client's position has been prejudiced and all insurers were paid. However, at the very least, it is likely that the FSA will look closely at your firm and at other aspects of your compliance.

It is often our experience that a lackadaisical attitude in one area of compliance leads to other areas of non-compliance, particularly where there is not a positive or supportive management attitude towards it.

Going back to the breach, you must make full disclosure of it alongside complete details of what you have done to remedy it and the steps that you have taken to ensure that this cannot happen again.

In view of the seriousness of the breach, I assume that you have not used a competent compliance consultancy or that no member of staff is sufficiently trained that they could realistically be referred to as compliance officer. I strongly advise you to take steps to put this right.

A decent compliance consultancy firm will be able to carry out a top-to-bottom health check on your firm and flag other areas of concern before the FSA finds them.

Seek a recommendation from a friendly competitor or visit the website of the Association of Professional Compliance Consultants apcc.org.uk, which contains a list of members and their areas of competence. The website also gives guidance on how to choose a compliance consultant.

Do it now, the future of your business depends upon it.

Ian Ritchie, director, RWA Group