Pritchard's - A Lesson in Compliance

The recent case of Pritchard Stockbrokers using client money for its own expenses highlights the severity with which the FSA is now dealing with organisations that are breaching regulations.

The FSA issued a first supervisory notice to Pritchard, preventing it from taking part in further regulated activities, after being found guilty of using client money for its own expenses. In addition to breaching the golden rule of ring fencing client monies this also put client monies at risk – the firm’s assets were also frozen and clients were informed that Pritchard was no longer working for them.

The regulator said that it had come to the decision as it had ‘serious concerns’ – specifically that Pritchard had failed to arrange ‘adequate protection’ for client’s assets when it was responsible for them.

The impact for Pritchard’s is severe - all retail clients’ stock assets transferred to W. H. Ireland  and cash assets to  Reyker Securities plc, whilst Pritchards itself has now entered administration. W. H . Ireland’s £500,000 investment secures 8,000 new clients with non-cash assets of £400 million. This increases its private-client stockbroking client numbers by c.50% and total assets under management by c.25%. The cost of compliance cannot be under-estimated, nor, perhaps the potential benefits.

Pritchard’s actions raise several questions – not least how the stockbroker could go unnoticed using client money for internal expenses. This highlights the necessity for internal systems and processes which would record or flag abnormal activities regarding the movement of funds and fraudulent activity.

It also highlights how businesses at risk of legislation and compliance need to remain on ‘their toes’. Legislation doesn't generally go away; if anything the trend is for increased regulation  and firms must ensure they have sufficient processes in place to establish and maintain compliance. Failure to do so will inevitably result in warnings, as highlighted in the case of Pritchard’s, that have the potential to evolve into fatal penalties. 

FOI and Housing Associations

The Freedom of Information Act (FOI) came into force in 2005 and demands that individuals have the right to information, the right to confidentiality and the right to effective administration.

As such the act means that members of the public can demand information at any given time and it must be readily accessible. Considering today’s government is planning to consult on extending the FOI still further, this should give those Housing Associations with limited grip on their documents serious cause for concern.

A housing association typically holds vast amounts of information about each resident – past and present – and each property, making management of the sheer number of documents a trial in itself. It is therefore critical that a system and a set of robust processes are in place to manage such information, allowing administrators easy access to relevant material as requests are made.

Many housing associations are not however sufficiently equipped to easily produce information as requested, and are falling short when it is being demanded. Not being able to produce such information sends out the clear message that Housing Associations are not forward looking, not up to date and are simply inefficient when it comes to the management of documents. Above this, the simple time cost of manually trawling through documents in order to satisfy an FOI request can be enormous.

Housing Associations must realise that it isn’t difficult, costly or disruptive to manage information in such a way that enables ready compliance with the Act – even if the legislation is extended. Culturally it doesn’t have to be difficult either – in a society when information is readily available (the Google Corporation is after all now a verb), it will be nothing short of an anachronism that any organisation cannot access the right information immediately.

Housing Associations must therefore evaluate their processes ahead of more stringent requirements coming into force. The question is not just whether or not the FOI is appropriate to Housing Associations. In a way this doesn’t matter – from an operational and forward-looking perspective, the ability to comply should be a given. 

Further Reading:

http://www.insidehousing.co.uk/home/blogs/data-overload/6519921.article 

The Mortgage Market Review & You

As the governance, risk and compliance bandwagon rolls on, and the ongoing need to evidence suitable ‘Know Your Customer’-oriented processes, so the Mortgage Market Review (MMR) consultation paper arrived in late December.

But for the typical IFA, what does it mean to day-to-day processes and workflows? Following the MMR, the ability to build and assess a full and complete profile of a potential borrower in order to ascertain the risk to the lender becomes a necessity. And rightly so.

After all, squeezing interest rates and deposit thresholds in order to mitigate against the damage caused by unexpected losses will only get the lender so far in the current economic climate.

Know Your Customer is increasingly being about understanding the risk of potential customer’s appetites. However, lenders should be aware that when MMR legislation is blended with Anti-Money Laundering legislation will surely mean that it is only a matter of time before there is a high profile case where the lender is seen to be misleading borrowers. As a result, the manner in which documents are created, edited, stored and presented is absolutely crucial – in fact, business critical.

Brokers, wealth managers and other investment houses are increasingly putting systems in place to ensure that relevant checks are not only being made with regard to records, content and document management, but that also provide financial organisations with security against auditors and any potential customer complaints.

As with much of corporate best practice, it is considered a nice-to-have until legislation insists upon it. Well, in the case of IFAs and best practice document processing, that time has surely arrived.

Document & Content Management for Housing Associations: A White Paper

Most of the white papers we’ve produced to date have been generic in kind – that’s not to say that they’ve not had focus, but they’ve been as applicable to a manufacturer as to a constructor or a charity. We’re taking a slightly different tack with the latest off the production line. This is sector specific , notably Housing Associations and other Social Housing providers. That’s not to say that some of the points we make aren’t valid elsewhere of course, but the focus is on a group of organisations which is of increasing importance to Invu. The number of HAs that we deal with continues to rise and rise.

The Social Housing sector faces all manner of pressures, from keeping costs down to service levels to financial control. Document and content management can play their part in alleviating these pressures by acting as so much more than simple passive repositories. This is mature technology which can be optimised to deliver even more value and this paper sets out to explore the options. It’s borne out of our experience to date and, in particular, where we’ve been back to existing customers to explore how they can benefit from work we’ve done for other HAs with the latest versions and technologies at our disposal. For example, the Adactus invoice processing, workflow and QLF integration project has delivered a solution which is of genuine interest to many other HAs. Great news and those customers taking the solution on board will see real benefits, from ROI, service level improvements and that critical financial control.  

Why not download the whitepaper http://www.invu.net/info/whitepapers.aspx and see if your organisation can reap the benefits too?

Housing Associations under pressure

Housing Technology magazine publishes provides IT, Technology and Telecommunications news to 8,000+ business and technology strategy decision makers in the UK social housing sector and local government. Document Management continues to be a pragmatic solution in the HA space – in fact we’ve been delighted to work with around 40 HAs in increasing depth, making Invu an important presence. 

The July edition of the magazine includes a focus on the importance of getting the eDM decision right and deploying successfully. HAs are facing increasing demands with changes to funding, auditing and governance all eating into resources against a background of cost pressures and a focus on service levels. eDM is not a silver bullet but we’ve seen some genuinely impressive results even with tight budgets.  Find out more by reading the Do’s & Don’t White Paper at: 


http://www.invu.net/info/whitepapers.aspx