AR oversight: what to check between annual reviews

An annual review is easier to carry out when you have kept track of the firm during the year. You can look at what changed, what your team checked and whether the follow-up was completed.

If that history is scattered across emails and spreadsheets, the review starts with a search for information. It is easy to spend more time assembling the file than considering the firm.

Know what you are checking

Start with the information you hold about each AR: its business, permitted activities, people and financial position. Decide which changes would need a closer look and how you will find out about them.

Register checks are useful, but they only tell you part of the story. Complaints, returns and conversations with the AR can show changes that a public register will not.

The FCA’s 2024 review of principal oversight found examples of firms relying too heavily on AR declarations and basic checks. Its good-practice examples used a wider range of information to understand what ARs were doing.

Make routine collection easier

Set out what you need, who should provide it and when it is due. A firm should be able to see the return it needs to complete. An Individual should receive their own request for personal declarations.

Scheduling that work saves your team from recreating the same requests each quarter or year. Keep track of what is outstanding, then follow up where information is late or incomplete.

Give findings an owner

A director change, a late return or a new disclosure needs someone to consider it. Record the finding, assign it and decide whether it affects the firm’s risk or needs further action.

Some changes will have a straightforward explanation. Others will need more information or a review. Record that reasoning either way, along with any action you took.

Keep the evidence with the decision

When an issue is resolved, keep the supporting information and the reason for closing it. When a review is approved, retain the records the approver saw, their decision and any conditions or follow-up.

The live firm record will change. You still need to be able to explain the earlier decision using the information available at the time.

A useful place to start this week

• Pick one AR and check whether you can follow its history since the last annual review.
• Look at overdue returns and open issues. Does each one have an owner and a next step?
• Check whether completed work includes the evidence and the reason for the decision.
• Use any gaps to improve your collection and follow-up process across the network.

How Merrin helps

Merrin schedules routine returns, monitors register information and keeps findings against the firm or Individual. Your team can see missing information and unresolved issues, then follow them through to a recorded outcome.

It also keeps the information considered in each review with the approval decision. Your compliance officers still assess the findings and decide what action is needed.

Have a look at monitoring and issues or schedule a demo to see how it works.