The FSA needs to be raising important matters at CEO level rather than at Compliance Officer level, according to the CISI Compliance Professional Interest Forum.
A number of the 600 strong CISI Compliance Professional Interest Forum members were in receipt of the FSA’s“Dear Compliance Officer” letter sent in June this year and the Forum undertook a survey of its members to examine their views on the targeting and effectiveness of these FSA letters.
Julian Sampson, Chairman of the CISI Compliance Professional Interest Forum said: “Our main concerns are that choosing to address this letter to the Compliance Officer was not, in our view, the appropriate person to select given the patterns of accountability in firms. In addition we felt that the timescales and the breadth of what was required of us merited a more considered period of response with a clearer focus on what was actually being sought from us.”
Sixty four of the Forum members replied to the survey which highlighted a number of key areas for reform:
- When asked if “The Compliance Officer is the correct person to address such queries to” 34% of respondents indicated “Disagree” while 26% “Disagree strongly”. In their letter to the FSA the Forum states: “This particular letter in our view identified the wrong person and is a precedent to be avoided in the future. The FSA has consistently observed that failings in firms often stem from a failure of culture – and specifically, of compliance culture – at Board and senior management level. Consequently we were surprised that this letter was not addressed to an executive Board member such as the CEO, but to the Compliance Officer.”
- The survey looked at the impact of not addressing the letter to the Chief Executive. Forum members were asked to agree or disagree with the statement “The Chief Executive is the correct person to address such queries to”. 32% indicated they “Agree” while 42% said they “Agree strongly”. The Forum said it was concerned that the “Dear CO” letter was “indicative of FSA’s view that the Compliance Officer is of greater seniority than he or she may in fact be. Even when the holder of CF10 is indeed a Board member (and our experience is that this will often not be the case), the executive director with whom most responsibility and influence rests will always be the Chief Executive Officer. Therefore we were surprised that this letter did not continue the established practice and address itself to the CEO.”
- The Forum also expressed concerns about the timescale of one month to compile answers to detailed questions as too short, as this letter was looking, in particular, for four years of historic data. When asked the question“The timescales set within the letter are appropriate”, 39% indicated“Disagree” while 29% “Disagree strongly”.