Press Release: 20th June 2006
Beachcroft research contributes to new risk assessment framework for FSA: ARROW II
Following its 2005 survey of financial services firms across the UK, Beachcroft LLP's findings have now been incorporated into the Financial Services Authority (FSA)'s revised risk assessment framework: ARROW II.
ARROW is the FSA's acronym for its 'Advanced Risk Responsive Operating Framework' - a system of assessing risks posed by regulated firms to the Authority's four key objectives:
* Maintain confidence in the UK financial system
* Promote public understanding of the financial system
* Secure appropriate protection for the consumer
* Reduce scope for financial crime.
All regulated UK firms must comply with the framework - and demonstrate compliance during an ARROW visit. But independent research commissioned by Beachcroft LLP in September 2005 suggested widespread dissatisfaction with the way in which these visits were being carried out.
As a result, the FSA has now reviewed ARROW, making changes to the framework itself and to the way in which the risk assessment is carried out. This has included retraining 750 supervisory staff to improve skills, increase knowledge and encourage better communication. The revised model, ARROW II, will be implemented by the end of September 2006.
Financial services partner Mark Broadhead, who is based at the firm's Manchester office, said: "The research we carried out last year was the first time anyone had really looked at ARROW in any depth. It immediately highlighted frustrations with the reality of the visits and the way in which they were carried out and we were pleased to pass these comments directly back to the FSA.
"The Authority has tried hard to address many of these concerns and we expect the majority of firms to welcome the revised framework. However, they must also do their bit and prepare adequately in advance of an ARROW visit in order to guarantee a successful outcome."
In its 2006/7 business plan, the FSA's Chief Executive John Tiner reiterated the importance of the ARROW framework to the regulator: "Our risk-based approach (ARROW) is the engine room of our business and we have invested heavily in the last two years in updating and improving our approach."
To help firms fully understand, prepare for and manage ARROW II visits, Beachcroft's specialist financial services team is running a conference at the Radisson Edwardian Hotel in Manchester on 7th July 2006.
For further information about the event, please contact Kerry Atkinson on 0161 934 3090.
For more information, please contact:
Debbie Garritty/Emily Goehler, Bell Pottinger North
email@example.com / firstname.lastname@example.org
Tel: 01625 506444
Notes to Editor:
Beachcroft LLP (formerly Beachcroft Wansbroughs) is one of the largest national commercial law firms in the UK. With over 1,400 employees, it provides legal advice and litigation services from seven locations in the UK (two in London, Birmingham, Bristol, Leeds, Manchester, Winchester) and also in Brussels. From routine insurance claims management to 'trusted adviser' work for major national and international organisations, the firm delivers integrated legal services to clients in four main industry groups: health and public sector; real estate and construction; financial services (including the insurance industry); and technology, media and telecommunications.
The firm received 20 new entries in Legal 500 2005, a guide to the top 500 lawyers in the UK; in Legal Week's client satisfaction survey, the firm came second amongst all law firms in the UK; and Beachcroft is one of the largest law firms in the country to obtain the 'Investors in People' award across all of its offices.
The Manchester team currently includes 19 partners and 198 staff. Its partners have particular expertise and experience in commercial litigation, commercial property, injury/risk, professional indemnity, corporate/commercial and employment law.
For further information, please visit: www.beachcroft.co.uk
In September 2005, Beachcroft conducted research amongst 136 firms from all segments of the financial services industry which looked at FSA ARROW visits. This demonstrated that the FSA scored highly in a number of areas:
* 85% of firms stated that the notice period they received from the FSA about an impending visit was sufficient
* 80% of firms confirmed that the FSA provided them with a preliminary briefing at the end of their visit
* 77% of firms received their Risk Mitigation Programme (RMP) within 3 months of the visit and 67% considered the isues raised in the RMP to be accurate
* 75% of firms stated that the FSA appeared to have relevant experience of the firm's market sector.
However, when asked for feedback on the conduct of the FSA and the impact of the visit, more than half of respondents were highly critical. Firms felt they were unable to take a proactive approach to managing the visit and some felt interviews were an interrogatory and confrontational process.