Top 10 tips for managing SFC inspection opening meetings

The Securities and Futures Commission (SFC) conducts regular routine inspections on all licensed corporations to check their compliance with the Securities and Futures Ordinance, its subsidiary legislation, SFC codes and guidelines and the firm’s own policies and procedures. Inspections can be daunting but based on client feedback, a well-organised and proactive opening meeting presentation is key to a successful result. In our client alerts of 4 May 2012 and 12 January 2015, we provided hints for licensed corporations to prepare and stay ready for inspection visits. In this article we share our top 10 tips for ensuring successful opening meetings and routine inspections:

1. 

Bring MICs and ROs front and centre

Senior management participation in the opening meeting shows that the firm’s leadership is engaged and committed, and that the regulator’s visit is important to the firm. All Managers-In-Charge (MICs) / Responsible Officers (ROs) should therefore try and attend (either in person or by dialling in) and speak at the opening meeting.

2. 

ROs to describe current business activities

The ROs are in the best position to explain the firm’s business activities (i.e. its services, clients and remuneration sources). But, ROs need to remember that they are not marketing the firm’s services to the SFC so they need to focus on explaining exactly what the firm does and why they need the licence they have.

3. 

Each MIC to discuss their Core Function

We know MIC compliance is a key SFC priority so all the MICs should discuss, report on and / or update the SFC in relation to each Core Function they manage to demonstrate that they are really in control.

4. 

Tell SFC everything you want them to know about your internal controls, compliance infrastructure, risk management systems, etc.

What the ROs and other staff need to “market” is the firm’s internal control framework and compliance infrastructure.

5. 

Future plans

If your firm is planning any changes to its business activities or licence in the near future, you should mention this in the opening meeting.

6. 

Make sure you cover all the SFC’s agenda items…but be concise

Sometimes the SFC provides a list in advance of the items the inspection team wants to cover at the opening meeting. In such cases, make sure you cover each of the requested items, but be concise, prioritising the facts that you want the regulator to remember.

7. 

Impress SFC with how you stay on top of SFC communications

Given how important SFC circulars have become, you should try and mention those that are of particular relevance to your firm’s business and the specific steps your firm takes to comply with these circulars and stay on-top of SFC communications generally.

8. 

Use all the time allocated

Opening meetings provide a perfect opportunity for your firm to impress relevant SFC senior management members so you should try and use all the time they are willing to allocate to the meeting so that you can make the most out of it.

9. 

Distribute hard copies and have a professional looking deck

Hard copies of the slides serve as a very useful reminder to the inspection team of the information provided at the opening meeting because team members can refer back to the slides throughout the onsite inspection and after they finish their field work. You should have someone proof-read the slides carefully though and make sure they look professional.

10. 

Let your body language speak for you

It is not only the content that drives the message. The ROs and MICs need to be “present” throughout the opening meeting so (leave your phones on your desk and) focus on instilling confidence. Pay attention to facial expressions and maintain eye-contact and smile!

Deacons regularly provides clients with training on SFC on-site inspections designed for management and / or staff. This training covers what to expect, opening meetings, dos and don’ts for SFC interviews, current SFC hot topics, etc. We can also conduct compliance “health checks”, which are designed to identify potentially problematic areas and to offer recommendations.  Please do not hesitate to contact us for further details.