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Regulatory zone - ARROW
Law-Now
08.07.2010
What is ARROW?
ARROW (the Advanced Risk-Responsive Operating frameWork) is the tool used by the FSA to assess risk in regulated firms. For relationship-managed firms this consists of a preliminary documents review followed by an on-site inspection visit that focuses on systems and controls, risk management and governance (an ARROW visit).
The FSA’s new approach to ARROW visits
Regulated firms can experience tougher ARROW visits as the FSA actively challenges the quality of firms’ governance and the viability of their strategies. In the past, supervision focused on ensuring that the appropriate systems and controls were in place. The FSA did not question the overall business strategy of the firms it regulated and relied on senior management to make the right judgments. The FSA’s current view is that the financial crisis has demonstrated that senior management judgments cannot be relied upon and that, in some cases, non-executive directors are struggling to fulfil their role of providing strong independent oversight of executive management.
Useful materials
ARROW assurance: avoiding unpleasant surprises – click here to view our ARROW planning tool. If you would like to look at the topic in more detail, follow the sequence of developments or read the underlying publications, click here to access our daily monitoring reports on this subject - starting with the most recent; each report contains a summary and a hyperlink to the publication concerned.
How can we help?
We have undertaken several ARROW preparation projects in the past six months across the full range of financial services institutions including an international fund manager and a major retail bank. We are well-placed to assist you in identifying the documents FSA will require and to carry out a protective pre-visit review, to prepare directors and key personnel for their FSA interviews and to ensure that you are properly prepared for FSA’s visit. Click here for an explanation of our approach to ARROW preparation.
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