News/Events/The End of Term Report

The End of Term Report


The headline in the business pages of the Guernsey Press on 12 December reads “Poor governance now bigger issue than financial crime”. The underlying report followed the GFSC’s annual update to industry held late in November and can also be tied into the results of the ‘Financial Crime Governance, Risk and Compliance’ thematic reviews published by the GFSC earlier that November.

It all makes you feel rather like the slightly naughty school child, sitting somewhere in the middle of the class, contemplating your school report. You probably know the one – mostly you’re doing great but you can’t help but focus on all the negative points.   In front of you are the teacher’s pets; the ones who not only do their homework, and the stretch goal project but also off their own back submit an additional project on a related theme.  You know you should really be like them.  Behind you are the truly naughty ones (thankfully not too many), the ones who don’t do their homework, or only pay it lip service.  Some will fail dramatically and catastrophically, some will muddle on through.   You don’t want to be like them.

But still, there you are, looking at the report, focusing on the negative points. No matter that the headmaster says that 95% of you are doing fine, no matter that the written report identifies only a few ‘bad eggs’.   It is in our nature to focus on the bad.  So here we gleefully focus on the bad.

At speech day, the Director General gave poor marks for ‘incidents of inappropriate operational risk’ being on the rise, for a lack of understanding of a firm’s risk appetite, for weak non-executive directors, for lack of board level challenge, for inappropriate head office direction (sometimes contravening local laws), for lack of proper conflict of interest management, for fiduciary firms not understanding the structures they manage, for poor client take on procedures amongst other issues.

The written thematic review reports go further but the theme is familiar:

  • Lack of Board oversight of the Compliance Monitoring Programme;
  • Inadequate client take on procedures;
  • Inadequate fund performance monitoring;
  • Valuation procedures that fell short of the GFSC’s expectations;
  • Failure to properly mitigate identified licensee risks;
  • Compliance monitoring programmes not covering identified risks;
  • Compliance reports not detailing tests and results;
  • Failure to identify, monitor and mitigate key fund risks;
  • Inadequate compliance testing of intermediary relationships;
  • Inadequate testing of automatic screening processes;
  • Inadequate tolerance testing;
  • Inadequate detail in board minutes;
  • Inadequate consideration of conflicts of interest.

It all makes you rather afraid to receive your own end of term report.   Again – you know you are doing alright, but any black mark makes you feel awful.   Sadly, wherever you sit in the class, a report card is rather inevitable.   It may be this year or the next; perhaps in three or four years’ time.  But it most likely will come.

At school, you can get extra tuition to make the visit somewhat less painful, so what succour does real life provide? Active Group!

Active Group are superbly positioned to provide Governance, Risk and Compliance health checks either as a prelude to a regulatory visit, or just to give peace of mind to the licensee’s Board. At Active we have a team of professionally qualified personnel able to review your policies and procedures, your compliance and risk monitoring programmes and your minutes.  We can advise the Board on where improvements may need to be made and help to rewrite these policies, procedures and manuals if required.

So don’t fear these end of term ‘must do betters’, don’t fear being called in to see the headmaster, call Active Group and we’ll make report time a good time, and help you have a happy graduation!