10 tips for surviving compliance reviews

Congratulations, you’ve just been selected by the OSC for a compliance review—beginning next week!

Read: How to survive regulatory audits

Probably not the phone call you most look forward to, but if you’re prepared, the process is manageable.

There are five types of reviews, Laurie Cook, a partner at Borden Ladner Gervais, explained at the firm’s 2013 Investment Management Forum in Toronto.

• Full on-site review of firm operations.
• Targeted review, also known as a sweeper desk review. It focuses on one or more issues.
• New registrant review, usually within six months of registration.
• Impact review, for large firms that would have a significant impact on the market if they went out of business.
• For-cause review, done because of a complaint or referral from OSC’s enforcement branch.

Cook suggests 10 tips for handling a full on-site review:

• Advise legal counsel you’ve been selected.
• Start pulling records the regulator’s asked to see.
• Explain to the Ultimate Designated Person/CEO that he or she will be quizzed about the firm and how it conducts business.
• Ensure everyone in the office knows a review is coming and who’s been designated the point person. If the reviewer wants information, the request should go through the point person, who can then get assistance from other staff if needed.
• Set aside a clean, well-lit workspace for reviewers.
• Create a separate, labelled file folder for each requested item. If reviewers request something that isn’t applicable to your firm, leave a note to this effect in the folder.
• Keep a separate copy of requested records. This allows you to keep track of what reviewers have examined.
• If reviewers want to take documents back to their offices, make copies for yourself.
• Reviewers may divvy up files, so use a numbering system to keep track of who has what.
• Instruct your staff to treat the reviewers with respect, but not as their new best friends.

Also read:

Are you compliant? 9 regulation tips from the OSC

The danger of the pre-audit heads up

When compliance comes calling

Scrutiny of advisors to increase