SFC licensing and compliance hints – Mar 2020

What is your firm’s governance structure?

The SFC introduced the Manager-In-Charge regime back in December 2016 with the aim to “provide more clarity to the industry and strengthen our licensed firms’ governance structures so as to better align with the present responsible officer and regulated persons regime”.

According to the SFC’s circular in December 2016, it does not mandate any particular organisational or governance structure for licensed companies. It is the responsibility of a licensed company’s board to determine the proper delegation of authority and responsibilities among its senior management (including MICs). Although the SFC does not have a prescribed corporate governance structure (other than the MIC regime), the questions set out in Part II of the SFC’s Questionnaire A for new corporate licence application and in Section A2 of the Business & Risk Management Questionnaire provide an indication of the SFC’s general expectation in this area, so licensees should ensure that they are in a position to answer satisfactorily.

Coronavirus – an opportunity to review the effectiveness of your Business Continuity Plan (BCP)

Has your company experienced any operational difficulties with staff work from home during the coronavirus outbreak? Are there any areas where your BCP needs to be improved? Does your company’s BCP cover situations where all staff work from home or staff come to the office on a roster arrangement? Are there any other new BCP initiatives recently approved by senior management which are not yet included in the BCP? This might be the time to update or tweak the BCP. SFC licensed firms are all expected to implement and maintain an effective BCP which ensures minimal disruption to business operations in the event of a business contingency. Firms therefore need to be reviewing their existing BCPs and assessing whether the current arrangements address the evolving situation, and seek external assistance if required.

Deadline reminder

The SFC Asset and Wealth Management Activities Survey 2019 is due on 29 April 2020. Licensed firms which have had income from asset management, advisory on funds/portfolios, or private banking / private wealth management services during 2019 need to complete the whole survey and send it back to the SFC by this date. Similar to other SFC surveys, this survey is not stated to be mandatory. However, in practice if firms do not co-operate by submitting the survey on time, the SFC will probably follow up with them. Therefore from an SFC relationship maintenance perspective, it usually makes sense to participate. It is also worth remembering that it is just a survey designed to give the SFC information about what is going on in the market so firms should just answer the questions quickly, accurately and on a best efforts basis without over-thinking it. It might be useful to keep a record of the basis of selecting/inputting a particular answer/number for future reference.

Remote compliance health checks and BCP health checks

Deacons is now able to offer its popular compliance health checks remotely. Our health checks are designed to identify potentially problematic compliance areas and to recommend solutions and we are now offering clients the option of doing them completely remotely. We have also rolled out a new BCP specific health check service so let us know if you would like a proposal.