The policy outlines new regulations for the collection and reporting of sales, financial and compliance data for general insurance products, mortgages and other financial products. Companies failing to meet FSA deadlines face substantial fines.
In a survey of IT directors and managers in companies affected by the policy statement, recently commissioned by IT services provider Aspective:
- Nearly two-thirds (60%) do not believe the FSA understands the complexity of the compliance task it has set.
- More than three quarters (78%) of those questioned expressed doubt that the industry can meet its compliance obligations.
“The deadlines that the FSA has laid out in Policy Statement 04/9 are extremely demanding. With the first deadline for data collection due early in 2005, the sooner the financial services sector acts on this issue the greater the chance of controlling the true cost of meeting this regulation.” advised Javaid Aziz, CEO of Aspective. “By acting now organisations have the chance to incorporate regulatory needs within their core business systems and processes to provide long term benefit and avoid deploying expensive, temporary solutions.”
Policy Statement 04/09 is an attempt by the FSA to better understand the financial status and business activities of the companies it regulates in order to decide where and how its resources should be allocated. Its most important requirement is a regular financial audit and the FSA has said that firms should begin collecting data from 1 April 2005 and submit data from July 2005.
According to the IT managers, the greatest barriers to meeting this compliance deadline are the integration of multiple data sources and the complexity of fitting new regulations in with existing compliance demands.
The survey’s findings cast doubt on whether IT departments will meet the FSA’s deadlines based on their current plans:
- Nearly half (46%) admit that they either ‘do not think’ or ‘do not know’ whether their current IT systems are capable of meeting Policy Statement 04/9’s requirements
- 55% think that making their systems compliant presents either significant difficulty or is impossible
“There is no doubt that this regulation places serious demands on many of the larger financial services organisations.” Says Andrew Gillespie, insurance industry consultant and former CIO of Royal and SunAlliance. “If they are to meet the deadlines with satisfactory solutions then they will need access to the best technology, high quality industry skills and an excellent execution capability. Solutions provider Aspective is one organisation that possesses all three.”