Release Date: 11th December 2015
To access the original FCA document, click here.
Summary
The FCA fined Paivi Katriina Grigg £14,807 for failing to comply with Statement of Principle 6 while performing her role at Financial Limited and Investments Limited. Her failures included not properly identifying, managing, or controlling the increased risks arising from the Firms’ business model, which gave a high degree of freedom to ARs (appointed representatives) and RIs (registered individuals) in advising customers. Key failures highlighted in the final notice included an inadequate initial review of the risk management framework, failure to implement an adequate risk management framework, insufficient identification and documentation of risks impacting underlying customers, and the provision of low-quality and irrelevant management information (MI) to the Group Board. Additionally, she misunderstood her role in managing risks to underlying customers and failed to manage internal audit activities effectively.
Key takeaways for other firms:
- Comprehensive Risk Management: Ensure the risk management framework identifies and mitigates all significant risks, including those affecting customers.
- Adequate Documentation: Maintain a well-documented and standalone risk management policy and procedures document.
- Effective Management Information: Provide sufficient, relevant, and reliable MI to the Board to help them understand and manage risks.
- Responsibility and Accountability: Clarify roles and responsibilities, ensuring all senior managers understand and fulfil their duties, especially regarding customer risks.
- Internal Audit: Implement robust internal audit processes to assess the effectiveness of systems and controls objectively.
- Proactive Oversight: Regularly review and update the risk management framework to adapt to changing business models and regulatory requirements.
By adhering to these principles, firms can better protect themselves from regulatory penalties and ensure the fair treatment of customers.
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