10.4 Reporting, Record Keeping and Training and Competence
Key Takeaways
- Principle 11 requires a firm to deal with its regulators openly and co-operatively and to disclose anything of which the FCA would reasonably expect notice
- SUP 15 turns that principle into specific duties: firms must notify the FCA promptly of significant rule breaches, changes affecting the regulator's risk assessment, and legal or disciplinary proceedings of which it would expect notice
- Insurance intermediaries file the Retail Mediation Activities Return through RegData twice a year, and firms report complaints data to the FCA twice a year under DISP 1.10
- Complaint records must be retained for three years from the date the complaint was received, and money laundering records for five years from the end of the relationship or transaction
- The Training and Competence sourcebook requires firms to assess competence, maintain it through continuing professional development, and keep training records available for FCA inspection
Learning outcome 11 carries 15 questions — the largest block on the paper — and one of its sub-topics is the continuing obligation to report, keep records, and maintain training and competence. Section 10.3 covered how a firm gets authorised. This section covers what it has to keep doing afterwards.
Reporting and Notification
Principle 11 — the general duty
The FCA's Principles for Businesses include Principle 11: a firm must deal with its regulators in an open and co-operative way, and must disclose to the FCA appropriately anything relating to the firm of which the FCA would reasonably expect notice.
Principle 11 is deliberately broad. It is not limited to matters the Handbook happens to list, and a firm cannot defend a failure to notify on the ground that no specific rule required it.
SUP 15 — the specific notification rules
The Supervision manual (SUP 15) turns that principle into concrete duties. Under the general notification rule a firm must notify the FCA promptly of, among other things:
- a significant breach of a rule or of a requirement imposed by legislation;
- a change in the firm's circumstances that may affect the FCA's assessment of the firm, including changes to its business model, controllers or senior management;
- action taken against the firm by another regulator or an overseas body; and
- civil, criminal or disciplinary proceedings of which the regulator would reasonably expect notice, including fraud or serious irregularity involving the firm's assets.
Firms must also notify certain events in advance, such as a proposed change of controller, and must have arrangements that make sure notifiable matters actually reach the compliance function rather than stopping at desk level.
Periodic regulatory returns
Alongside event-driven notifications, firms submit periodic returns through the FCA's reporting system, RegData.
| Return | Who files it | Frequency |
|---|---|---|
| Retail Mediation Activities Return (RMAR) | Insurance and other retail intermediaries | Twice a year (half-year and year-end reference dates) |
| Complaints return (DISP 1.10) | All firms subject to DISP | Twice a year, covering six-month reporting periods |
| Prudential and solvency returns | Insurers, to the PRA | Quarterly and annually under Solvency UK |
The RMAR captures a broker's financial position, professional indemnity cover, client money, threshold conditions data and business volumes. The complaints return captures the number of complaints received, the products they concerned, the causes, the outcomes and the redress paid — the same data the FCA and the Financial Ombudsman Service use to identify firms and products generating consumer harm.
Whistleblowing
Firms of sufficient size must have internal whistleblowing arrangements and appoint a whistleblowers' champion at senior manager level, so that staff can raise concerns internally and, if necessary, escalate them to the FCA or PRA directly.
Record Keeping
The general obligation sits in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC): a firm must arrange for orderly records to be kept of its business and internal organisation, sufficient to enable the FCA to monitor compliance. Specific retention periods then sit in the relevant sourcebooks.
| Record | Minimum retention |
|---|---|
| Complaint records (DISP 1.9) | Three years from the date the complaint was received (five years for certain UCITS collective portfolio management complaints) |
| Money laundering records (MLR 2017) | Five years from the end of the business relationship or the completion of the occasional transaction |
| Client money records | Records sufficient to show, at any time, the money held for each client |
| Training and competence records | Retained and available for FCA inspection |
| Product governance records | Kept to evidence the target market assessment and the fair value assessment |
Records serve three purposes at once: they let the firm run itself, they let the regulator supervise, and they are the evidence base if a complaint reaches the Financial Ombudsman Service years after the sale. A firm that cannot produce a demands-and-needs statement or a call recording will usually lose a complaint it might otherwise have won.
Training and Competence
The rule
The Training and Competence sourcebook (TC), supported by the FCA's wider competence requirements in SYSC, requires a firm to ensure that its employees are competent for the activities they carry out, that competence is assessed before an employee is allowed to work unsupervised, and that competence is maintained afterwards.
The three limbs are:
- Recruit and assess. The firm must satisfy itself that an employee has, or can attain, the knowledge and skill the role requires — including, where relevant, an appropriate qualification.
- Supervise until competent. Until competence is assessed and signed off, the employee works under supervision by someone who is themselves competent.
- Maintain competence. Competence is not a one-off event. Firms must keep knowledge current through continuing professional development (CPD), keep pace with regulatory and product change, and re-assess where the role or the market changes.
Records and the senior managers regime
Firms must maintain training records and make them available for FCA inspection. Under the Senior Managers and Certification Regime (SM&CR), staff in certification functions must have their fitness and propriety assessed at least annually and be issued with a certificate, which is a competence obligation with an audit trail attached.
Why the Consumer Duty raises the bar
The Consumer Duty (Section 11.1) requires firms to deliver good outcomes and to be able to evidence that they have. That has pulled reporting, record keeping and competence together: a firm must monitor its own outcomes data, keep the records that demonstrate them, produce an annual board report on its Consumer Duty compliance, and ensure the staff generating those outcomes are trained to understand what a good outcome looks like. Poor record keeping is now, in practice, a Consumer Duty problem as well as a SYSC one.
A general insurance broker discovers that a systems fault has caused several hundred customers to receive incorrect renewal pricing information over an eight-month period. What is the firm's primary regulatory obligation?
Under DISP, for how long must a firm retain the record of a complaint from a retail general insurance customer, and from when does that period run?