Management information v1 6

2012

Management
Information
…and its use within an IFA scenario
Management Information (MI): Application of management
techniques to collect information, communicate it within and outside
the organization, and process it to enable managers to make quicker
and better decisions.
Management Information System (MIS) is a system or process that
provides information needed to manage organizations effectively.
Management information systems are regarded to be a subset of the
overall internal controls procedures in a business, which cover the
application of people, documents, technologies, and procedures.
Management information systems are distinct from regular
information systems in that they are used to analyse other
information systems applied in operational activities in the
organisation.

Page | 0 Version 1.6 June 2012
www.ceicompliance.co.uk The Compliance Doctor Lee Werrell
CEI Compliance Limited

Introduction to Management Information
By CEI Compliance Limited

Contents
Background ...................................................................................................................................................................
Fundamentals ...............................................................................................................................................................
Assessing Your Needs..................................................................................................................................................

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Background
Since March 2008, when TCF measures required Management Information
to provide a measure of how effective and the level of adherence of the
application of the initiative, it seems that the FSA have increasingly
encouraged businesses to use MI to demonstrate how they are operating
and identify areas that may require some attention.

A recent survey of companies across the FSA spectrum has provided
evidence that a number of firms use MI
but few can explain what they use it for
or why? Often these elements are
forgotten over time and seldom
reviewed to reflect contemporary needs
or risk factors.

Designing MI to suit a company’s needs is
not always easy, as it takes some time in
planning to identify exactly what is
needed. While we can, and have
helped a number of organisations of all
sizes constructing MI, the bottom line is,
as always, what is to be done with the
data.

So why use MI or develop our own system for MI? Surely we know what is
going on in our own business, don’t we? Obviously we do, anecdotally
and superficially that is clear, but how do we compare results to groups of
people, processes or risks identified and, furthermore, identify trends and
improving or deteriorating results over time? Even as that great fictional
investigator of Agatha Christie fame, Hercule Poirot would remark,
sometimes the little grey cells let us all down.

So if we are going to use any MI system, we have to understand and be
absolutely clear on the form it is to take. There is no point in running
multiple systems that offer a plethora of methods when all we will end up
doing is getting confused: often challenging understanding about the
definitions rather than the information.

Who does this apply to? Well, quite honestly everyone from sole trader to
large concerns; no one is exempt.

Whilst a few people are afraid of doing things wrong by not having “the
right” information it could easily be argued that, any information for
comparison could be seen as better than none in many instances.
Management information systems are designed to be organic and
changeable over time, to develop with your business model, help you
expand your business and can benefit you in many ways by assisting you
to make better, informed decisions.

Fundamentals
The basic rules needed for designing or improving any management
information that we need is, to make it;

 Relevant: Consider what is specifically relevant to your firm and who
needs to see it or be aware of it.
 Accurate: There is no point in making decisions based on rough
figures or perceptions of performance.
 Timely: How often does this need to be measured? Weekly;
Monthly: Quarterly? Who needs to see it and when? Does it need to
be collated first?
 Acted upon: What are the key triggers? We know all about KPIs but
what levels are acceptable? Be
clear on what you are looking for
Did You Know? In 2011,
and what you will do with it when
the FSA fined 9
companies over you know.
£2,870,000 in cases  Recorded: Write
involving inaccurate, down in hard or soft copy what you
misleading or non- do when you gather the
existent MI. information, why it is important and
Don’t get caught out. actions you will take at various
thresholds or breaches. Circulate
the results to those who need to
know and incorporate any decisions in policy reviews.

The next item on your agenda has to be to decide how the information is
going to be collected and used. How is it;

 Gathered or sighted. New business register, Continuous Professional
Development (CPD), Key Performance Indicators (KPIs), Key Risk
Indicators (KRIs), training logs, compliance consultants reports,
audits, TCF customer surveys, Not taken up(NTU) or Not proceeded
with(NPW) applications, trail commissions, fees, training courses
applied for or attended etc.
 Analysis. How is this information collated? All information for
everyone (name and shame) or certain data for Senior
Management? Are there to be graphs, tables, bar charts or
coloured segments to show progress, advancement on certain
issues? Decide how you wish to present the information.
 Circulation. Who needs to know and what level do they need to
know? An adviser may need to know % of target for themself and
their team, but management may need to know lapse rate and
case scores specifically.
 Action. Hold regular 1:1 meeting with staff. Set trigger points and
action plan frameworks to include remedial training or enhanced
supervision.
 Measurement. How are these elements to be measured and
moved on? What trends are there; are tolerances being met? Do

you need to use a scorecard? (See article on implementing the
balanced scorecard in small and medium sized firms at
http://www.cei-compliance-limited.co.uk/bsc/).

Do not leave these fundamental steps to fall into place, because without
them any further planning is unstable.

Assessing Your Needs
You have now decided what you are going to obtain MI on, and what
you are going to do with it when you have got it, so now what?

Now you have to look at the business processes and decide what you
consider relevant. To give you some ideas you could look at;

 Financial Position: Can you present to Senior Management that the
company is meeting the FSAs own funds test and meet all liabilities
as they fall due?
 Financial Rewards: Can you identify incentives or rewards that may
encourage inappropriate behaviour amongst the management,
staff or advisers?
 Span of Control: Do all individuals have CEI Compliance can assist you in
preparing all of your compliance
the resources and adequate support to
monitoring, risk register and
fulfil their role to the standards set by
remedial work planning.
the company? Call them today on 0800 689 9 689
 Risk Management: Can you or go online at
demonstrate that you have assessed
and prioritised all risks and can
www.ceicompliance.co.uk
evidence that risks are mitigated or
accommodated accordingly as well as
the culture displaying that TCF is fully embedded?
 Recruitment: Can you evidence that all Fit and Proper checks have
been completed on all advisers and that previous complaints,
concerns or other issues have had a satisfactory explanation or that
periodic credit and other checks have provided comfort that there
are no issues with advisers acting inappropriately?
 Competence and Qualification: Can you identify the gaps in
adviser’s knowledge and experience and take appropriate action
to ensure any skill gaps are remedied or provided for? Can you
confirm all advisers are adequately supervised?
 Turnover and retention: Can you confirm that the reasons for
leaving are specifically individual and not endemic?
 Advice Process: Can you confirm that advisers are giving suitable
advice and that their cases are being monitored adequately? How
are the advisers risk rated? Do we know what sources of business
are used by each adviser?
 Product/Provider Selection: Can you satisfy senior management
that products are adequately recommended according to the


client risk rating and that an appropriate range of products are
considered for recommendation?
 Financial Promotions: Identify financial promotions campaigns and
their link to profitability or additional business generation? Identify
any root causes from complaints (either end of next working day or
regulated, as applicable)?
 Complaints: Identify root causes and/or areas of concern for
advisers or teams? Confirm all staff
CEI Compliance conducts Executive are aware of their responsibilities?
Coaching for Regulatory Visits Identify average time of complaints
Call today on 0800 689 9 689 or send a investigations and resolution?
blank email to regvis2012@cei-
compliance-limited.co.uk

Current Practices
How do you know if what you are doing is good or bad? Surely if it works
for you, it is OK? It is your business after all.

The FSA have conducted studies of good and bad practices and while
we are not going to provide each area duplicated in this document, we
have reproduced some for you to get an idea of the things that are not
bad practices, but could be better.

Good Practice Poor Practice
T&C
The T & C scheme included The principal at the firm
completing an initial risk assessment considered that because he
for each adviser by grading each of trained and trusted an
them. This would take into account adviser, he didn’t need to
industry experience, qualifications, formally review his work.
complaints, types of business they There was some form of
would be writing, Key Performance training programme in place
Indicators (KPI’s) and the results of for a less experienced
file reviews. The three grades adviser. However, the lack of
determined how much supervision suitable monitoring and
each adviser needed. review procedures meant
there was a real risk that
Financial Promotions customers could receive
The firm had a procedure in place poorer quality of advice and
that recorded customer queries and the firm was exposed to the
complaints received about their risk of future complaints.
financial promotions. The results
were measured and analysed The firm’s website was not
enabling the firm to identify areas of included in its ‘Financial
concern and act upon them. Promotions’ checklist.
Therefore, the firm did not
remove out-of-date and
inappropriate material from its
website.


So to assess if your Management Information System is relevant, accurate, timely, acted
upon and recorded, you will need to answer a number of questions. Here are some
examples;
 Can you adequately assess the financial soundness of the people you recruit?
 Are new recruits adequately supervised?
 Can you identify weak areas of the advice process for individuals or a team?
 When was your Compliance Manual updated?
 Has the sales process changed since it was last documented?
 How well does your review service for clients work?
 Where there have been changes in circumstances for clients, do you
review the previous advice?
 When were your processes last tested and checked?
 How do you measure your complaints; purely by numbers?
 Are you comfortable of the impact of your adviser’s remuneration?
If you do not assess and measure your firm’s recruitment procedures to ensure
they are sufficiently robust, you could make inappropriate appointments.
Identifying and addressing the root causes of staff turnover is good business
practice. It could mean lower recruitment costs.

By identifying the level of competency of new advisers and understanding
the type of business they will bring to your firm, you can assess if this is
appropriate for the advice and services being provided to your customers
and you can assess your firm’s ability to adequately supervise them. This will
reduce the risk of your firm giving customers poor advice.

Not assessing and measuring how your firm identifies gaps in adviser skills and
knowledge or the quality of the training could lead to poor advice. Not
measuring key indicators such as persistency rates, replacement business and
complaints may hide issues which could develop into larger problems later.

These failures could lead to costly remedial action or regulatory discipline in
the future.

So we have seen that assessing information gathered from key areas such as
financial promotions, complaints, recruitment and training and competence,
can help you measure the standards within your firm, identify risks, highlight
where standards can be raised and helps to protect your business. These
areas are high traffic areas and if you are involved in sales yourself, can be
very demanding and detracting from your own business.



CEI Compliance can help provide a full compliance
support service, reducing required management
time, ensuring all areas are up to date and working
for your firm’s long term benefit. Call 0800 689 9
689 today or go online at www.ceicompliance.co.uk

This whitepaper was written by Lee Werrell FInstSMM MCSI Cert PFS,
founder of CEI Compliance Limited. Lee is contactable at any time and
welcomes enquiries from all businesses. Call 0800 689 9 689.

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Management information v1 6

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