CEI Compliance is the UK's fastest growing regulatory consultancy and provides associate opportunities to consultants and cost effective value to financial services and other regulated companies. We show you what good MI is, and how best to use it to run your business.

1. 2011
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.
Lee Werrell
CEI Compliance Limited

2. Introduction to Management Information
By CEI Compliance Limited
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.
Page | 1 Version 1.0 Sept 2010
www.ceicompliance.co.uk Your Compliance Partner

3. Introduction to Management Information
By CEI Compliance Limited
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 and what you
will do with it when you know.
 Recorded: Write down in hard or soft copy what you do when you gather
the information, why it is important and 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.
Did You Know? Between The next item on your agenda has to be to
April and September decide how the information is going to be
2010, the FSA fined 5 collected and used. How is it;
companies over £850,000
in cases involving  Gathered or sighted. New
inaccurate, misleading or business register, Continuous Professional
non-existent MI. Don’t
Development (CPD), Key Performance
get caught out.
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.
Page | 2 Version 1.0 Sept 2010
www.ceicompliance.co.uk Your Compliance Partner

4. Introduction to Management Information
By CEI Compliance Limited
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 the resources and adequate
support to fulfil their role to the standards set by the company?
 Risk Management: Can you demonstrate that you have assessed and
prioritised all risks and can 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 CEI Compliance can assist you in
advisers and that previous complaints, concerns preparing all of your compliance
or other issues have had a satisfactory monitoring, risk register and
explanation or that periodic credit and other remedial work planning.
checks have provided comfort that there are Call them today on 0800 689 9 689
no issues with advisers acting inappropriately? or go online at
 Competence and Qualification: Can you www.ceicompliance.co.uk
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 are aware of their responsibilities? Identify average
time of complaints investigations and resolution?
Page | 3 Version 1.0 Sept 2010
www.ceicompliance.co.uk Your Compliance Partner

5. Introduction to Management Information
By CEI Compliance Limited
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 completing The principal at the firm considered
an initial risk assessment for each adviser that because he trained and trusted
by grading each of them. This would an adviser, he didn’t need to formally
take into account industry experience, review his work. There was some form
qualifications, complaints, types of of training programme in place for a
business they would be writing, Key less experienced adviser. However,
Performance Indicators (KPI’s) and the the lack of suitable monitoring and
results of file reviews. The three grades review procedures meant there was a
determined how much supervision each real risk that customers could receive
adviser needed. poorer quality of advice and the firm
was exposed to the risk of future
Financial Promotions complaints.
The firm had a procedure in place that
recorded customer queries and
complaints received about their The firm’s website was not included in
financial promotions. The results were its ‘Financial Promotions’ checklist.
measured and analysed enabling the Therefore, the firm did not remove out-
firm to identify areas of concern and act of-date and inappropriate material
upon them. 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?
Page | 4 Version 1.0 Sept 2010
www.ceicompliance.co.uk Your Compliance Partner

6. Introduction to Management Information
By CEI Compliance Limited
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.
free guide
Page | 5 Version 1.0 Sept 2010
www.ceicompliance.co.uk Your Compliance Partner