The continued importance of the Association’s Minimum Standards Review
Occasionally in your working environment you meet a person who inspires confidence by approaching their responsibility with such insight that their words and deeds stay with you. You may be surprised that in this case the person in question was an internal auditor. What he shared with me was this:
“Treat me as a business partner. I am not here to find fault, I am here to help you run your business.”
He was good to his word and remained, for many years, a colleague who’s counsel I sought.
I mention this because there are parallels with the Minimum Standards Reviews which we have been undertaking for the last three years. Just in case you haven’t experienced a review, let me paint a picture of what they involve.
We take time to understand your business, the source of your introductions and the process you implement to join borrower and lender. We step through the client and customer journey with you and review the processes and documentation that you use in your business.
We also discuss your general business policies and procedures to understand how you manage your operation and the consequent impact on your customer. Please be assured that this does not involve actual file reviews because we assume that you will not have your customer’s permission for such an exercise.
Reflecting on the agenda of a business partnership, our aim in undertaking these reviews is to help you run your operation. We have a model office with over 60 standard business forms against which we can compare your documentation. We have already visited over 500 Member firms and we have observed examples of best practice across a range of operations large and small. Knowledge management is a great example of how we can add value to your business.
We simply can’t ignore regulation in our sector, which now presents itself in many guises and part of our review agenda is to make sure your business doesn’t unwittingly fall foul of the rules by which it should adhere.
This is probably a good place to think about the Association’s mission statement and judge whether our review activity aligns with our direction of travel.
The NACFB’s mission remains to partner with our Members to foster professional expertise. Our aim is to help brokers embrace the highest industry and regulatory standards, including engagement with our stakeholders, to help your business prosper.
Our aim is to make sure we use the review, and consequent observations, to ensure your business is run as professionally as possible – as well as conforming to all the elements of regulation that apply to your operation. Our Patrons, who are vital stakeholders, show an extremely keen interest in the fact that there is a level of oversight of both regulatory and professional performance and this is evidenced by the high-level results and general direction of travel and trends. The additional assurance that we are able to deliver serves only to help our Members prosper so it feels to us that this activity is driven straight from our mission.
And the benefits don’t stop there. Part of the agenda is to promote the quality of this industry to the wider business finance and regulatory community. It will come as no surprise that the FCA show a keen interest in this element of what we do and all the time that we can demonstrate that we are working hard to deliver a level of oversight, they might just accept that this is all that is required. Afterall we are, by comparison, a small sector on which to deliver regulatory oversight.
We are also passionate advocates of the professionalism of our Members and the results of this activity also provides us with supporting evidence when engaging with other stakeholders such as the Bank of England and British Business Bank.
In closing allow me to share one piece of best practice which may be useful. There does appear to be a recurring theme that some of our members are not keeping much evidence of there dealing with their clients. Whilst there is plenty of activity being discussed, we have a concern that if it is not recorded appropriately. If there is some degree of misunderstanding or dispute in the future, your evidence will be invaluable in being able to demonstrate that you performed your responsibilities diligently and within the regulations in place.
I hope that I have been able to share the benefits of a visit with you. We are embarking on a programme of visits in 2019 and I extend an invitation to all our Members to contact the compliance team if you would like to reap some of the benefits that I have been discussing.
Erica Meredith, Compliance Consultant, NACFB
Download the NACFB Minimum Standards brochure below. If you would like to book a Minimum Standards Review, please get in touch with the NACFB Compliance team.