Phase 2 Skilled Person report – front office control and governance

The Firm was mandated by the FCA to commission a two phase Skilled Person (FSMA s166) report to consider the robustness of front office controls and governance. Our work was to assess the adequacy and effectiveness of the Firm’s remediation following its Phase 1 Skilled Person report and determine the extent to which remediation was sustainable and embedded into operational practices.

We performed reviews of the Firm’s enhanced control environment, organisational governance and remuneration strategies to determine the extent to which the oversight of brokers was effectively discharged across the lines of defence and whether the Firm had aligned, culturally its reward structures in a manner that balanced performance, control and compliance.

We met with a series of key stakeholders including Senior Managers, HR staff members, Brokers and Desk Heads as well as second line of defence functions to consider how compliance and risk oversaw the processes and the broker controls within the first line. Our work considered whether Brokers are adequately supervised and whether the Firm’s requirements on front office staff engendered appropriate behaviours.

The Firm had made a number of enhancements and materially remediated its control environment. We advised the client on some additional areas for consideration, including the span of control for specific individuals, to improve the sustainability of oversight and mitigate future key person risk.