Compliance with the FCA’s regulations is crucial for UK advice firms. Firms should look to establish an overall compliance culture: understanding the rules; implementing adequate policies and procedures; monitoring and reviewing. Plus, making sure individuals understand the rules, and supporting everyone with regular training.  

Considering the extensive requirements, firms face a key decision: should your compliance support be managed in house, outsourced, or a blend of both?  

As with all operational decisions, it’s different for every firm. As expert providers of outsourced compliance services, we’re always available to advise on how you meet your obligations – and we’ve considered some of the risks and benefits below.

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‍The benefits of handling compliance in-house:

Greater data control:

• With the regulator becoming increasingly data-led, firms can expect to see more frequent information requests. Having a dedicated individual in house responsible for monitoring your management information (MI) can provide better control over the consistency, quality and accuracy of your data reporting.

Training & Competency oversight:

• Internal management of Training and Competency (T&C) provides hands on oversight of staff development. This can provide a more in-depth oversight of individuals strengths, weaknesses and monitoring of progression.

File checks:

• In-house file checks can contribute to having sufficient oversight of advisers and help to maintain adherence to your T&C scheme. This can make it easier to spot any trends or areas of concerns to be rectified.

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The risks of handling compliance in-house:

Higher costs:

• Staffing can be expensive. Salaries, equipment, employee benefits and office space all add up, particularly for smaller firms.  

Ongoing training needs:

• Dependent on experience, you may need to invest in training both from an internal process driven approach and in ongoing professional knowledge.  

Risk of falling behind:

• Even firms with internal compliance often outsource some support to ensure they stay up to date with regulatory changes and industry best practices.  

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The benefits of outsourcing compliance:

Access to experience:

• Outsourcing gives you access to a team of experts. This is a cost-effective way to stay current with regulatory developments and industry trends.  

Insight:

• It can be difficult to critically access your own processes. A third-party provider offers independent, honest feedback that can help identify inefficiencies or areas of non-compliance that may otherwise go unnoticed.  

Lower costs:

• Outsourcing is often more affordable than hiring inhouse, making savings on salaries, benefits and office overheads while still gaining expert input.  

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The risks of outsourcing compliance:

Responsibility remains in-house:

• Even with external support, the regulatory responsibility remains in house with the compliance function (SMF 16).  

Limited day-to-day support:

• Outsourced compliance places a focus on audit work and regulatory updates, the day-to-day responsibilities still need to be managed internally.

Risk of losing in-house expertise:

• It’s easy to become over reliant on external support. Be mindful not to let internal knowledge slip as you still need the ability to interpret regulation and challenge the third party where you feel appropriate.

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There’s no one-size-fits-all solution. Some firms benefit from full-time in-house compliance, while others prefer to outsource or use a hybrid approach. The key is to assess your firm's specific needs, resources, and risk appetite—then build a compliance model that provides oversight, efficiency, and resilience.

As part of the expert Compliance team at Verve, I can work closely with you to assess, build and maintain a Compliance approach that works specifically for you.  

If you’d like to get started today, click here to book a chat. For more insights like this directly to your inbox every couple of weeks, sign up to our Eclipse newsletter here.

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