Several times when we visit smaller firms, they are surprised when we pull them up for a default in their resolutions or reports because they have ‘lifted’ them from documents provided by larger firms.
The smaller firms tend to think that the larger firm must have got their facts right because they have compliance departments and risk committees checking their compliance. Don’t fall into that trap.
For example, one major firm currently uses an IVA modification that states that the IVA trust will survive until the debtor dies. The implication from this modification is that the trust ceases if the debtor is found dead one morning. We are sure that the creditor would not have stated this and it is therefore an error in drafting by the big firm, but everyone accepts it as true because big firms cannot be wrong.
Anyone can get compliance wrong, even us. The difference is that we are unlikely to get your systems wrong because we have never seen them before, so we do not assume that the system or checklist is a statement of what actually happens. If we get something wrong, it is usually because we have not found a document in your filing system. If you get it wrong, it is usually because you have assumed that your system is right. This led one major organisation to give an undertaking to check proxies and suffer an early revisit to check their compliance when they thought that staff were following a system that had significant control issues.
To avoid his happening to you, have an external review done annually, to ensure that the systems you think you have are rigorously enforced.
