TCF - Regulatory call to attention

I note that your firm is based in the West Country and the FSA has said that it will carry out a series of regional checks on TCF progress during 2009, with the West Country being first selected.

If your firm is selected, you will receive several weeks' notice by e-mail. The e-mail will ask you to confirm that you are able to attend on a particular date or time in your area; it will also ask you to submit certain material within a shorter timeframe that will typically include: an organisation chart; your most recent TCF gap analysis; a copy of your new business register showing business written in the last 12 months; and a copy of your compliance consultant's most recent report on TCF.

From our own experience, we know that receipt of such an e-mail has been a serious wake-up call to some firms. This month sees the fourth anniversary of FSA regulation and, from the regulator's perspective, it would not be unreasonable to expect that, after four years, firms have got their act together on TCF and other aspects of regulation.

In answer to your question regarding whether or not you may receive the call, the FSA has said that it intends to contact 4,000 firms this year and another 4,000 in 2010. If, as a director, you have delegated day-to-day management of TCF to a lower level, you will be able to take the appropriate manager with you to the meeting, although you will not be allowed to bring external representation such as your compliance consultant.

What the regulator is looking for is that you are able to demonstrate what TCF means to your business and how you have embedded it into your daily processes and, critically, that you are able to demonstrate it. Remember the old adage, 'if it is not recorded, it didn't happen'. If the FSA is not happy with a firm's responses then it is likely to undertake a supervisory visit to the firm.

The regulator expects to find firms that have made substantial progress, bearing in mind the high profile that TCF has enjoyed throughout 2008. Firms that have made little or no progress or fail to demonstrate their grasp of the topic should expect a tougher time from the FSA.

In summary, if you receive the call and you have paid heed to the milestone dates for TCF throughout 2007 and 2008 and have evidenced this adequately then you should not have a problem.

However, you might want to play the hypothetical game of 'what if we received the e-mail today?' and discuss with board colleagues, managers and your compliance consultant (if you have one) how well placed or otherwise your firm would be, both in short-term response on documentation and how you would fare in articulating your TCF processes in an interview.

That apart, happy new year.

Ian Ritchie, director, RWA Group.