How FCA compliance consultants prepare a gap analysis

How FCA Compliance Consultants prepare a gap analysis

A gap analysis – a simple concept. A gap analysis is used to establish the differences between the current situation of a company and the requirements of regulations that the company has to comply with.

Scoping the Work

Work starts with understanding what your firm does, what FCA permissions your firm has, and which rulebooks apply to your business.

Gathering Your Documentation

Policies, procedures, training records, board minutes and the output from previous audits all need to be reviewed by the FCA Compliance Consultants undertaking the Gap Analysis. The consultant may provide the firm with a list of documentation required in order that the firm can gather the relevant information prior to the review commencing.

Reviewing Against the Regulatory Standard

Each document is reviewed against the relevant part of the published FCA expectations for a firm of this nature. All the gaps identified as part of the review are logged whilst relevant.

Categorising the Findings

Gaps are generally categorised into three bands – critical, significant and minor – in order to help assess the effort required to address each. Critical indicates likely breach or current breach; Significant indicates significant effort required but workable within a reasonable timescale; Minor indicates trivial to fix with very low effort required.

Producing the Report

The final report sets out the findings in a written report detailing the gaps, classifying them against the level of risk (critical, significant, minor), cross referenced against the relevant rule and outlining the action that is required and the timescale within which this can be completed.

Having an understanding of what you can expect at each stage of a gap analysis will help in getting the most out of the process and preparing accordingly.