asset management
advisory services
tcc overview
TCC is the largest independently owned compliance
consultancy in the UK. TCC has an excellent reputation
for delivering specialist regulatory compliance services.
The core competencies of the business revolve around
understanding the FCA’s expectations in the relevant
market and providing practical solutions allowing firms
to appropriately meet these requirements.
TCC’s support to clients includes understanding their
individual requirements and assisting with project scoping,
business model and processes analysis, regulatory mapping,
controls gap analysis, regulatory and business change
impact assessments, processes and policies development,
planning and implementing any required remedial actions.
Governance &
Culture
Risk
Management
systems &
controls
change
implementation
TCC delivers expert solutions to the
asset management sector through the
following core competencies:
asset management support
TCC has a proven track record in providing support to our
asset management clients.
The experienced Asset Management Advisory Services
Team includes:
Ex-FCA Supervisors in the Asset Management
Department who have previously led individual firm risk assessments, thematic reviews and fund supervision
Compliance professionals who have held numerous regulatory/compliance policy and monitoring roles at large and medium sized global asset managers Individuals with experience in back/middle office functions and within global transfer agents and third party administrators
Experience within associated sectors including Wealth Management, Financial Advice, Life and Pension Providers and Discretionary Fund Management
andrew glessing
Managing Director Advisory Services
All of the Advisory Services team have
extensive experience working for the
FCA or within compliance functions of
regulated firms
FCA business plan themes
Culture
Including governance, responsibilities of the board, management information and escalation of issues, autonomy and empowerment of control functions, accountability, remuneration, recruitment
Fund charges paid by investors
Transparency and clarity and unfair contract terms
Inducements and conflicts of interest
Reference to potential MiFID II requirements
Market abuse
FCA’s expectations of firms and their controls and new focus on high
frequency trading
Financial crime controls
Focus on both anti-money laundering (including sanctions and terroristfinancing) and anti-bribery and corruption measures
Technology resilience
The FCA will take action on firms that fail to maintain technology that could result in risks to consumers. Firms must have a robust BCP plan in place and sufficient protection against cyber crime
Implementation of EU law
The FCA made reference to its implementation of various measures which will require changes to policies and procedures, including – MiFID II, Market Abuse Regulation, PRIIPS, Benchmark Regulation
The FCA published their 2015 Business Plan in March. For the first time, there is significant focus from the FCA on the asset management sector, with commitment to developing an asset management market study. Below lists key themes from the Business Plan, many of which read across to the to the MiFID II European requirements:
Post authorisation review of funds and
segregated mandates
Whether funds are investing and performing as stated in the fund material (factsheets, KIIDs and prospectuses); likely to consider model portfolios, risks, charges, target market
Distribution models
The FCA will undertake a market study into non-advised sales of investment and protection products, including how firms support consumers in choosing products that are suitable for their circumstances
mifid ii/mifir requirements
In early 2014, the European Parliament and Council adopted new legislation that will overhaul MiFID. The revised Directive (MiFID II) and new Regulation (MiFIR) represent a significant set of reforms which will lead to a reshaping of the financial markets, the products and services that firms provide and the relationship between firms and their customers. Both MiFID II and MiFIR entered into force on 2nd July 2014, and must be implemented within Member States by 3 January 2017. Key focus areas for asset managers include:
Product design and governance – product approval process
requirements, including target market and risk identification
New power around product intervention – MiFIR is proposed
to give regulators new powers to prohibit or restrict the
marketing distribution or sale of certain financial instruments or
financial activity
Transparency requirements – including costs/charges,
execution venues, third party payments
Voice recording – requirement to record all telephone and
face-to-face conversations that may lead to the execution of an order
Execution-only banned for further instruments – e.g.
structured UCITS funds, shares that embed a derivative, bonds
not traded on regulated markets
Best execution and order handling – policy must contain sufficient
detail, be in clear to understand language and firms must make
public for each class of instrument the top 5 execution venues used
on an annual basis and firms should not receive any remuneration
for routing client orders to particular trading or execution venues
Inducements – investment firms undertaking portfolio management
will be banned from accepting fees, commission or any other
benefit paid or provided by a third party relating to the precision
of services to clients. Still to be determined whether investment
research and execution-related services provided to IMs out of
dealing commission will be permitted
Bundled services – firms will be required to provide evidence
on the costs and charges of each component of a service (e.g.
execution and investment research services)
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hot topic - market abuse
The FCA conducted a thematic review of how asset management firms control the risk of committing market abuse. The review considered how firms control the risks of insider dealing, improper disclosure and market manipulation, with a primary focus on equities and insider dealing.
Firms should review their policies and procedures to control the risk of market abuse and ensure that these operate effectively and cover all material risks.
Key Points:
Good Practice:
Managing the risk that
inside information could
be received but not
identified
• Effective policies to identify and capture inside information which are consistently applied
• Policies should include when information is unintentionally received (e.g. when enough details are provided for the fund manager to deduce the company and the nature of the event)
ü Wall crossings - an initial point of contact for soundings that is independent of the fund managers
ü Company-specific research - a designated point of contact for staff to discuss any concerns about whether inside information might have been received and a consistent approach to meeting companies prior to results being published
Controlling access to
inside information and
managing the risk of
improper disclosure
• Policy limiting the sharing of inside information to those who need to know
• Monitoring in place to assess the effectiveness of this policy
ü
Maintaining a detailed log of who is privy to the inside
information
Pre-trade controls
to prevent market
manipulation and insider
dealing
• Pre-trade block on trading securities on the restricted list (and ensuring securities are added to the restricted list on a timely basis)
• Documenting the rationale for trading decisions
ü
A segregated dealing function which can flag potentially
manipulative transactions
ü
Recording the telephone lines of staff directly involved in
the investment process
Key Points:
Good Practice:
Post-trade surveillance
• Post-trade surveillance that effectively highlights potentially suspicious trades (including trades preceding price-moving corporate announcements)
• Thoroughly investigated any potentially suspicious transac-tions
• Comprehensive documentation of external meetings
• Awareness of front office research activity
ü Regular monitoring of the recorded telephone lines of fund managers and traders
Personal account dealing
policies
• Effective policies and procedures to reduce the risk of market abuseü Requiring pre-trade approval for PA dealing and conducting a post-trade review to monitor for any suspicious activity
Training
• Training (new joiner and annual) to ensure employees’ under-standing of the market abuse rules is kept up-to-dateü Face-to-face training to complement online training
ü Include recent market abuse cases/scenarios specific to the firm
ü Frequent reminders to staff to be alert to the risk that information could be received in unexpected situations
tcc areas of expertise
ü
Corporate governance structure and effectiveness
ü
Management information provided to Boards and
Committees
ü
Senior management responsibilities
ü
Culture and treating clients fairly
ü
Conduct risk
ü
Training and competence requirements
ü
Recruitment, remuneration whistleblowing policies
Governance & Culture
ü
Business model analysis and risk identification
ü
Market conduct, including trading practices
ü
Inducements and conflicts of interest
ü
Product design and governance
ü
Policies and procedures
ü
Client money
ü
Fee structures
ü
Oversight of third party providers and contingency
plans
tcc areas of expertise
ü
Transaction reporting
ü
Portfolio compliance - trade monitoring
ü
Best execution and order handling
ü
Market abuse controls
ü
Financial crime controls
ü
Errors and incidents
ü
IT resilience
systems & controls
ü
MiFID II
ü
AIFMD
ü
Market Abuse Regulation
ü
Global operating models
ü
Order management system implementation
ü
Impact assessments
ü
Post implementation review
client engagement examples
TCC has undertaken a variety of client engagements in the asset management sector, which include:Detailed review of firm’s conduct risk within the business model, including culture and governance, product development and distribution processes
Assessing the completeness and accuracy of transaction reporting arrangements, including operational
procedures, compliance testing and oversight of third parties
Conduct Risk
compliance function
Full-scale review of compliance structure and framework, including re-designing the compliance monitoring plan, development of new policies and procedures and providing training to staff where gaps were identified
regulatory change
portfolio monitoring
change implementation
transaction reporting
Assessing compliance with the AIFMD with particular focus on risk management, fund valuation and board reporting
Review of portfolio monitoring arrangements with particular focus on best execution and market abuse controls
Long-term project leading the compliance implications of implementing a new global order management system, including the development of a new global target operating model for compliance
case study:
full compliance review
and remediation
TCC approach:
ü
Business analysis:
Full scale business model analysis and
understanding of the scope of the firm’s activities
ü
Regulatory mapping:
Determining all applicable regulations, FCA
handbook requirements and FCA permissions required
ü
Risk identification:
Identifying all risks associated with the business
model, including all conflicts of interest
ü
Gap analysis:
Assessing the adequacy of current risk management
activities, including all governance and oversight arrangements in
place
ü
Remediation design:
Design of a new risk management framework
from risk identification process through to management, mitigation
and the ICAAP
ü
Implementation:
Updating policies and procedures, introducing
a new compliance monitoring plan and risk log. Detailed project
management plan and timelines and provided regular updates to
senior management
ü
Training:
providing training to staff where knowledge gaps were
identified (e.g. market abuse)
Client: A medium sized UK-based asset manager
Background: Development of processes, procedures, systems and
controls had not kept pace with the growth of the business and increasing regulatory requirements
Task: Required a full FCA-style assessment of its compliance
framework, highlighting any gaps or weaknesses
For more information about how we can help
your business, get in touch on 020 3772 7230
to arrange a meeting to discuss your individual requirements.
case study:
new global compliance
operating model
TCC approach:
ü
Business analysis:
Primary analysis to understand the firm’s current
systems, processes and controls in place across all offices globally
ü
Impact analysis:
Working closely with the business to understand
their requirements across all front to back office functions and
hosting global workshops to discuss current state processes
ü
Requirements:
Follow-up workshops to set out the future global
operating model and processes and to discuss identified challenges,
inconsistencies in local processes and regulatory requirements
ü
Project management:
Monitoring key deliverables against planned
deadlines, tracking risks and issues through to resolution in a RAID
log and providing updates to the committees
ü
Implementation:
Sitting alongside the business stakeholders in
different locations globally and supporting the implementation of
new systems, processes and reports and improvements required
ü
Testing:
Conducting user acceptance testing of the newly
implemented processes, systems and reports
Client: Top 5 global asset manager
Background: Their existing operating model and architecture was
based upon the consolidation of a number of legacy boutique businesses, and as such was complex, inefficient and costly and carried significant operational risk
Task: The client was implementing a new order management system
and required full re-engineering of their compliance processes, systems and reports globally
For more information about how we can help
your business, get in touch on 020 3772 7230
to arrange a meeting to discuss your individual requirements.
asset management team
chris martin
Senior Regulatory Consultant
Profile: Chris is a Regulatory Consultant
with nearly 10 years’ experience in financial services, specialising in Asset Management.
TCC: Client engagements have included conducting assessments of firm’s
compliance functions, including governance arrangements, systems and controls, policies, processes and procedures, implementation and oversight of remedial actions; advising firms on the impact of new regulation and recommending changes to comply with the new requirements; Compliance workstream lead for implementation of a new Order Management System (OMS) at a global asset manager.
FCA: Chris was previously Lead Associate in the Complex Events Team in the
FCA’s Supervision Division. Prior to that he was a Senior Associate in the Asset Management and Advisers Department. His work included leading firm specific risk assessment visits and thematic work looking to proactively identify risk in the firm’s business model; leading supervision projects and cases, including industry redress schemes.
Industry: Chris has previously worked at Barings Asset Management and
International Financial Data Services (IFDS).
andrew glessing
Managing Director Advisory Services
Profile: Andrew is Managing Director of
TCC Advisory Services with over 25 years experience in regulated firms, including 7 years FSA/FCA experience in firm and thematic supervision
TCC:Client engagements have included delivery and oversight of governance, risk management and compliance reviews and the development and
implementation of remediation plans; assessment of firms’ readiness for FCA-style supervision and management of conduct risk; assessments of compliance with the FCA’s guidance on provider/distributor arrangements; fund manager authorisations.
FCA:Team manager and lead supervisor for a number of large and medium-sized asset managers under the FSA and FCA’s supervisory models. Work included firm specific risk assessments of asset managers’ governance and risk management arrangements, systems and controls, policies and procedures and prudential risk management, change in control assessments, oversight of remedial work, assessment of outsourced arrangements and investigation of conduct related issues in the sector.
Industry: Andrew’s other previous experience includes roles in asset
management and life and pensions organisations.
The Asset Management Team is led by senior regulatory consultant Chris Martin. Get in touch
with him on 020 3772 7230 to arrange a meeting
asset management team
judith wright
Associate Director
Profile: Judith is an Associate Director of TCC
Advisory Services with over 20 years financial services experience, including 7 years in compliance monitoring and policy roles at asset managers.
TCC: Client engagements have included detailed assessments of asset
mangers’ compliance functions, governance and systems and controls, including full conduct risk assessments and working with the business to implement regulatory change; in-depth reviews of asset manager’s policies and procedures, including outsourcing arrangements, Committee ToR,
development of the Compliance Manual, setting of the compliance monitoring plan and audit work to cover the whole business from the front to back office.
Industry: Judith was a Compliance Policy Manager at a global asset manager
and prior to that was a Compliance Officer at another global asset manager. Judith has held additional roles in wealth management, discretionary fund management and financial advice.
Judith also holds a law degree.
sarah barton-white
Regulatory Consultant
Profile: Sarah is a Regulatory Consultant, with
previous portfolio compliance experience at a top investment bank.
TCC: Client engagements have included advising firms on new and existing
regulatory requirements including action plans for how firm’s can adapt and ensure compliance with new regulatory requirements; system and controls assessments, change implementation projects looking to redesign global compliance models, the design and build of compliance procedures, policies and manuals, investment guideline monitoring oversight, compliance monitoring arrangements and risk management assessments.
Industry: Sarah worked at Goldman Sachs as a Senior Compliance Analyst,
first in their central Regulatory Team and then in the Asset Management Compliance Advisory Team supporting the front office. Sarah’s work included handling trading errors and guideline breaches, pre- and post-trade compliance support (guideline queries, new issues, restricted list, best execution, fair allocation, cross-trades), product launches and desk/product reviews.
Sarah has a legal qualification (GDL) from BPP Law School and a BA from University College London.
The Asset Management Team is led by senior regulatory consultant Chris Martin. Get in touch
with him on 020 3772 7230 to arrange a meeting
Head Office
UK Operations Centre
The Consulting Consortium Ltd6th Floor
10 Lower Thames Street London
EC3R 6EN
Tel: +44 (0) 800 970 9754
www.theconsultingconsortium.com
The Consulting Consortium Ltd 1 Broadgate
The Headrow Leeds
West Yorkshire LS1 8EQ Tel: +44 (0) 113 261 5860 Fax: +44 (0) 113 261 5861
