SYSTEMS AND CONTROLS

The Financial Services Authority (FSA) places much emphasis on the systems and controls of a firm. So much so that there is an FSA Handbook module dedicated to it - Senior Management Arrangements, Systems and Controls (SYSC)

The SYSC Handbook module states the responsibilities of directors and senior management. It sets out the rules for managing a regulated business and should be aligned to the Mortgage Conduct of Business Handbook.

It is a complex Handbook for newly regulated firms and some of them have come to the attention of the Regulator for remedial action. Some firms also think that SYSC is only for large firms. This is not so although some areas are disapplied for sole traders. The FSA has a frequently asked questions section on this topic.

The FSA is to provide guidance on "extending the common platform to non-MIFID firms" which means that mortgage firms will have to review their existing arrangements for compliance, risk, internal audit and outsourcing and make changes by April 2009.

An examination of the SYSC arrangements is an integral part of most FSA meetings with firms and features strongly in ARROW assessments and these are:

Senior management arrangements
Systems and controls
General organisation
Employees
Compliance, internal audit and financial crime
Risk control
Outsourcing
Record keeping
Conflicts of interest
Liquidity risk
Group risks
Operational risk
Prudential risk
Credit risk
Whistle blowing.

The Telos Compliance service is able to assist and guide firms through this complex area, review existing arrangements, advise changes, prepare for FSA visits and agree a programme of regular assessment.

The process of SYSC review and audit is critical to mortgage firms and is therefore one of our key services, including a follow up six month review.