Compliance

Many start-up brokerages appoint a director or senior manager to oversee compliance, often supported by an external compliance consultancy. This can be an effective arrangement, particularly during the early stages of growth, but responsibility for compliance always remains with the firm.

When describing your compliance structure, explain how compliance responsibilities are allocated, how matters are reported to senior management and how issues are escalated and resolved. If you use a third-party provider, include details of the support they provide and how their work is overseen by the business.

The FCA expects firms to understand the key risks associated with their business model and to explain how those risks will be controlled.

Rather than listing every possible risk, focus on those most likely to impact your customers, regulatory obligations or business operations.

For most start-up brokerages, this is likely to include:

The strongest applications don’t simply identify risks; they explain who is responsible for monitoring them, what controls are in place and what action will be taken if an issue is identified.

The FCA specifically asks whether the firm operates a risk-based compliance monitoring programme.

This is your opportunity to demonstrate how you will test whether your controls are working in practice. A monitoring programme should focus on the areas of greatest risk to the business and customers.

Monitoring activities may include:

You should explain how often monitoring will take place, who will carry it out and how findings will be documented and tracked through to completion.

Quality assurance helps ensure that customer-facing and operational processes are working as intended.

Depending on the size of your business, this may include file checking, customer communication reviews, complaints trend analysis or management reporting. The FCA wants to understand how you will identify weaknesses, learn from findings and make improvements over time.

Professional Indemnity Insurance (PII) is a regulatory requirement for insurance brokers and should form part of your overall risk management approach. While detailed policy information is not usually required within the business plan itself, it is sensible to explain how appropriate cover will be obtained and reviewed as the business grows.