www.sii.org.uk

Compliance Forum18.5.05

Development in T & C and the Impact on SII

Ruth MartinManaging Director

FSA and FSSC

• Potential “deregulation “wholesale”

• Potential changes in Controlled Functions

• Potential changes in Anti-Money Laundering

• Implications for Appropriate exams

FSA

• Current review of T & C Handbook

• Part of Business Plan for FSA

• Consultation Paper due end June 05

• Contain proposals to no longer require intermediaries to have appropriate examinations

FSA (cont.)

• Appropriate examinations limited to “retail”

• Rationale linked to senior management responsibilities

• TC1 will continue to be required, but not TC2

• Rationale linked to FSA commitment to reduce burden for Firms

Potential Changes to Controlled Functions

• Proposed to reduce and/or merge Controlled Functions

• Rationale linked to reducing burden and complexity

Potential Changes to Anti-Money Laundering

• SII not involved in discussions to date – have members of Compliance Forum been involved?

Changing Dynamics FSA & FSSC

• “Appropriate” list will no longer cover wholesale as MOU between FSA & FSSC will include “retail” only.

Changing Dynamics FSA & FSSC

• FSA will be unable to enforce “wholesale” sector to use FSSC as FSSC role in wholesale limited to non-exam standards activities such as “performance” standards. FSSC likely to try and focus increasingly on these standards to try to keep a link.

Changing Dynamics FSA & FSSC

• Performance Standards need to be used as a guide in shaping new examinations and FSSC likely to try and make these more important. The proposed Compliance Standards and Anti-Money Laundering Standards fall into this category.

Changing Dynamics FSA & FSSC

• Major impact of FSA proposals on SII examinations if Firms no longer have to ensure staff pass examinations.

Implications for Firms

• Initial discussions indicate that many Firms will welcome the changes and seek informal arrangements between Trade Bodies and SII to provide for examinations for the future.

Implications for SII are:

• Reduction in “Certificates” exam entries

• Careful review of “retail” definition, bearing Mifid in mind, as it relates to SII products

• More modular and bespoke exams for Firms in wholesale sector likely

• Impact on Compliance professionals?

Next Steps

SII Board will discuss developments tomorrow