Service Overview

The financial services industry is more acquisitive than ever. Increasing compliance and operating costs coupled with new Private Equity investment is changing the landscape.

In addition to merging or acquiring entities, firms are also carving out and purchasing open and closed books of business. For an acquiring firm, it is a vital that the risks and issues which manifest within a target firm are well known, or as seen with defined benefit pension transfers, the ramifications can be costly. We are continually supporting firms with M&A activity across multiple sectors. Our work has enabled transactions to progress successfully, and also has prevented our clients from buying firms that would likely result in costly remediation exercises or unpalatable levels of regulatory scrutiny in the future.

How Square 4 Can help

We provide third party specialist regulatory due diligence for firms on both the buy and sell side of a transaction. We can provide due diligence services on all aspects of regulation, or on specific areas or books of business the firm feels it requires additional expertise or capacity. We have a tried and tested approach of:

  • Document reviews;
  • Stakeholder / key individual interviews;
  • File / case testing;
  • Report findings, risks and recommendations.

 

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Service Benefits

  • Third party specialist assurance that the firm is compliant / not compliant with all relevant areas of the FCA handbook.
  • A clearly articulated regulatory due diligence report outlining our findings, risks, recommendations, and any potential remediation activity.
  • Optional redress modelling where appropriate to support the commercial decisions of the transaction.
  • Post transaction support to ensure the target firm is migrated into the acquiring firms structure effectively.
  • Insight into what Square 4 are seeing across other firms that we work with / are undertaking due diligence on.

Why Choose Square 4?

  • We operate as a ‘trusted partner’ to the firm, and we’ll clearly cite any risks, concerns and potential remediation activity required so there are ‘no surprises’. We also work with a partner actuary firm to undertake any potential remediation cost modelling where necessary.

  • Our detailed review methodology is tailored to each transaction depending on the size and nature of the firm, and continually evolves in light of regulatory and industry change and advancements. For example; Consumer Duty compliance, ongoing service fulfilment, and data quality.

  • Following the due diligence exercise and decision to proceed with the transaction, we also support firms with the migration of the target firm into the acquiring firms structure. This often translates to proposition migration support, staff training, aligning governance, MI and reporting.

FAQs

Q: What subject areas can you provide regulatory due diligence on?

A: We can provide regulatory due diligence on any firms captured within the FCA’s perimeter, and all areas of the FCA handbook. As well as general conduct compliance, we can also support in specialist areas such as ESG, SDR, CASS, Operational Resilience and Financial Crime. In addition, we partner with firms who provide PRA subject matter expertise so that our clients don’t need to use multiple regulatory due diligence suppliers.

Q: How long does the process take?

A: Our work is dependent on gaining access to documents, files and stakeholders at the target firm. In addition, the scope of work and size of firm can vary drastically. Once we have access to all relevant information however, we aim to undertake our work and present our report within a four to six week time frame. If you require a simple ‘red flag’ review and are at the early stages of due diligence activity, these timescales can be compressed further.

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