SFC licensing and compliance hints – Jul 2016

SFC finding more breaches

According to its 2015-2016 Annual Report, the SFC conducted 306 risked-based on-site inspections of licensed companies during its last financial year (i.e. 1 April 2015 to 31 March 2016). This is only four more inspections than the previous year but the number of breaches identified on the inspections was up by nearly 50%. Non-compliance with AML guidelines was up by 90% (although this could be because the SFC conducted thematic AML inspections during the year). Other significant breach categories identified included internal control weaknesses (i.e. deficiencies in areas like management review and supervision, segregation of duties, adequacy of audit trail for internal control purposes, information management and operational controls over handling of client accounts), in relation to which there was a 86% jump. Code of Conduct breaches increased by 64% (main areas being risk management, record keeping, client agreements, management responsibility and safeguarding of client assets). We suspect that the number of Code of Conduct breaches will go up in the next financial year as a result of the March 2016 changes to the Code of Conduct professional investor regime.

CPT reminder

We are now in the second half of 2016 which means licensed individuals have less than six months to comply with their annual CPT requirement. Anyone who has not started to get CPT hours this year needs to start making arrangements. Feel free to contact Deacons about conducting onsite compliance training.