REGULATORY EXPERTISE
Why CIRP ? The reason we have a joint investment and retirement proposition is because there ’ s a lot of crossover as the main driver in both instances is PROD . So , why have a separate CIP and CRP ? It doesn ’ t make sense . Plus , the direction of travel from the regulator is to be considerate of the differences between an accumulation client and a decumulation client . So why not combine your CIP and CRP so they can work together instead ?
What makes an efficient CIRP ? So , let ’ s look at the framework of a CIRP . The typical broad areas to consider are fairly standard , however , the actual content and design will differ dependant on each of the firms we work with because there is no prescribed approach . Each firm ’ s CIRP is unique to their way of working , and the nature and make-up of their clients . We split it into key areas , starting with the logical point of " What does guidance from the regulator look like ?" and ending in " How do we find out which manufacturers are good at what they do ?"
Regulator guidance : The obvious starting point is the FCA and considering best practice and guidance from publications such as FG12 / 16 amongst others . Once you absorb this guidance it kind of sets the tone for the rest of the CIRP as guidance influences how everything is designed off the back of it .
Responsibilities and reviews : A simple but essential section which lays out responsibilities and the scope of the CIRP in terms of what will be reviewed and its frequency .
Platform , product and investment philosophy : This area makes each CIRP unique to the firm we work with . The reason why this particular area varies so much is basically down to the proportionality concept within the Consumer Duty . A firm ’ s philosophy will be dependent on :
• the nature , scale and complexity of the business
• the size of the firm
• the services offered
• the consumer base served .
Risk management : This is central to the advice process to make sure that the investment solution matches the description of the agreed risk the client is willing and able to take .
WHY HAVE A SEPARATE CIP AND CRP ? IT DOESN ’ T MAKE SENSE .
Accumulation strategy : This area delves into the question of how a firm will deliver robust procedures when investing , which again will be individual to that firm .
Decumulation strategy : Retirement is one of life ’ s major events . Here there is a shift in emphasis and risk from accumulating capital to providing income from capital , so as you would expect the robust procedures here would be different .
ESG strategy : We ’ ve seen this area develop over the years and it deserves to be included in a CIRP .
Product governance : This is the engine room of a CIRP , the concept being split into three key points : 1 . Client segmentation 2 . Identifying relevant financial instruments 3 . Ensuring the most appropriate relevant financial instruments are used with the right clients or segment of clients .
Platform , product and investment selection process : Once the blue-sky , high-level concepts have been developed , it ’ s time to explore what good looks like when selecting manufacturers . This is where we started 10 years ago before realising that blue sky needs to be completed first .
Review procedure : Nothing stands still within financial services and that applies equally to how firms invest on behalf of clients . Continual regulatory updates , as well as innovations within the marketplace , make it a given that a CIRP should be reviewed periodically . So that ’ s a run-through of the CIRP framework , it ’ s big and we hope it ’ s clever . It ’ s designed to document exactly how a firm will take on the complex areas of investing for growth and also retirement . Furthermore , it aims to drive a more efficient investment process by formalising the investment and retirement proposition that a firm may employ .
Need CIRP help ? Karl and his team are available to help any of our Member or Client firms on any aspect of their CIRP , from embedding the fundamentals to honing their efficiency .
Log into our website and find them in the Compliance area , or just email bc @ simplybiz . co . uk
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