Record Keeping Requirements for FCA Authorised Firms

A firm must arrange for orderly records to be kept of their business and internal organisation, including all services and transactions. This must be sufficient to allow the FCA to monitor the firm’s compliance with regulatory requirements. These records should be capable of being reproduced in English (if required or appropriate).

The general principle is that these records should be kept for as long as it is relevant for the purpose for which they are made. However, for certain records the FCA may require them to be kept for either three years or six years.

Appropriate records need to be kept in the following areas:

1. Senior Management Arrangements.
2. Compliance with regulation.
3. Sales and administration.
4. Training and competence
5. Good repute
6. Appointed representatives.
7. Accounting and auditors’ reports.
8. Complaints.
9. Systems and Controls.

Senior Management Arrangements (SYSC)

A record of the arrangements of the organisation must be kept. This includes apportionment, oversight and the split of responsibilities. This can be by means of organisational charts, job descriptions, project management documents and terms of references. These records need to be regularly updated and need to be kept for six years.

Compliance with regulation

You will need to keep records of any audits that are performed and any compliance breaches that are found. You should record all compliance breaches, the action taken to rectify the situation and the action taken to stop it happening again. Significant breaches may need to be reported to the FCA. It is recommended that significant breaches are kept for six years in line with the auditor report requirements.

Sales and administration (ICOBS)

The FCA has not specifically identified records they wish firms to keep. Firms should, however, bear in mind that to deal with requests of information from the FCA and their own customers, they may require evidence of matter such as:

• the reasons for a personal recommendation
• documentation provided to a customer
• how claims have been settled and why

Training and Competence – sales staff/approved persons

A firm must make appropriate records to demonstrate compliance with the rules in this sourcebook and keep them for three years following periods after an employee stops carrying on the activity. Suggested records to comply with this rule would include:

1. Recruitment – record the process followed to recruit the person, including how you determined they were suitable e.g. application form, interview notes, credit and criminal record checks etc.
2. Information on how you assess training needs of staff and how you then meet these training needs.
3. Assessing competence – the criteria used to assess whether someone has attained competence and when they attained competence.
4. Maintaining competence – the criteria used to assess continued competence (e.g. written assessments and practical assessments) and whether the employee has, in fact, maintained competence. If they have not, what actions have been put in place to rectify this?
5. Supervision and monitoring – the criteria used to assess the supervision and monitoring of both staff that are not yet competent and those that are competent. How the monitoring and supervision of staff will be carried out.

The new SYSC 28 (covered elsewhere) also contains rules and guidance relating to knowledge and competence (CPD) record keeping requirements.

Appointed representatives (AR)

The following records need to be kept on the AR for three years following termination or amendment of an AR contract:

1. the AR’s name;
2. a copy of the original contract with the AR and any subsequent amendments to it, including any restrictions placed on activities;
3. the date and reason for terminating or amending a contract with an AR; and
4. any agreements with other Principals.

The firm will also need to be satisfied that the AR keeps appropriate records.

Accounting and auditor records

1. Client money – retain sufficient records to show and explain the firm’s transactions and commitments. These need to be kept current and up to date and will need to be kept for three years after the record is made. (CASS 5.5.84R)
2. Client money shortfall – record each client’s entitlement to client money shortfall. Up to date records need to be kept until the client is repaid.
3. Financial accounts for six years.
4. Auditor reports for six years. Auditors will need to produce a client asset report that includes the following:
   a. the firm has maintained systems adequate to enable it to comply with the Client Asset rules throughout the period since the last date as at which a report was made;
   b. the firm was in compliance with the rules as at the date on which the report was made;
   c. if a secondary pooling event has occurred, the firm complied with rules in relation to a pooling event.
5. The auditor’s report must be produced no longer than fifty three weeks following the last report.

Complaints

The following information needs to be kept for a minimum of three years from when an eligible complaint is received:

1. the name of the complainant;
2. the substance of the complaint;
3. copies of correspondence between your firm and the complainant;
4. and details of any redress offered by your firm.

In addition, the firm will need to keep records to allow them to meet FCA reporting requirements.

Other records

Records should be kept on the following:

• business strategy;
• business continuity plans;
• recruitment and personnel records;
• annual declaration on financial standing and criminal records for approved persons and retail sales advisors;
• criminal record and credit checks.