In April this year, the Financial Conduct Authority (FCA) issued a supervisory notice against Strowz Ltd, a wealth management firm, imposing immediate restrictions on regulated activities. The restrictions followed a visit by the FCA, in which commingling of client funds, unauthorised access to client accounts and a failure to meet disclosure obligations was revealed. In this article, we explore how a regulatory technology provider, like Axiol, could be used to prevent breakdowns, through compliance oversight, robust risk management and effective control frameworks.

Safeguards Around Client Money

One of the main concerns identified by the FCA was the lack of controls to prevent the mixing of client money with its own funds and that client assets may have been accessible to third parties. Such breaches are in clear violation of the CASS framework and undermine client trust entirely.

Our integrated Risk Management Module, Axiol Risk, allows for risks to be identified in real time, giving compliance teams a comprehensive view of risk exposure. Risks are clearly linked to controls and regular control assessments can be undertaken, allowing for ongoing compliance monitoring. Control effectiveness scoring, financial impact calculations and task delegation ensure effectiveness of safeguards. When concerns do arise, Axiol Risk works hands in hand with our suite of compliance modules, enabling confidential whistleblowing and the submission of Suspicious Activity Reports (SARs), creating a comprehensive, closed loop system of risk detection and escalation.

Oversight of Appointed Representatives (ARs)

Maintaining oversight of Appointed Representatives (ARs) can be a struggle for firms. Strowz appeared not to have a structured approach for reviewing the fitness or financial stability of ARs, or the adequacy of controls. The firm also operated beyond its permissions.

Axiol enables structured reviews of ARs, tracking key metrics through annual attestations, allowing compliance teams to monitor changes, assign remedial tasks and undertake due diligence. These reviews are logged and securely retained in line with FCA expectation, helping firms to remain audit ready at all times. Firms can utilise customisable forms for AR onboarding, ongoing assessments and annual attestations. When risks or issues are flagged, Axiol users can assign remedial tasks and ensure accountability. Axiol is underpinned by role-based access, which protects sensitive data and information, ensuring only relevant users have access to information. Axiol turns oversight from reactive to proactive, while strengthening regulatory compliance.

Monitoring Risks in Real Time

Firms that cannot, or do not, actively monitor their risk exposure leave themselves and their client vulnerable. Strowz demonstrated this with no apparent firm-wide mechanism for tracking conduct, responsibility or risk ownership.

Axiol helps firm maintain a real-time picture of their risk landscape, from personnel risks to SMCR obligations around conduct, liability and responsibility. Axiol allows firms to monitor individual responsibility and ownership of tasks, while using the Incidents & Breaches modules to track any red flags through a centralised dashboard.

All data collected by Axiol can be generated into clear management information and board-level reports, allowing compliance to be transparent in their actions and the board to make informed decisions based on live data.

A comprehensive system like Axiol contributes to firms’ compliance monitoring plans, equipping compliance teams with the tools they need to act in the moment, not after the fact.

Meeting Regulatory Obligations

Strowz failed to meet multiple reporting obligations. The firm did not submit its REP025 returns, missed client audits between 2022 and 2024 and didn’t disclose changes to the FCA. Even after the FCA raised concerns, the firm continued to withhold information.

While Axiol does not submit returns directly to the FCA, it equips compliance teams with everything needed to meet reporting obligations on time and in full. Through the Regulatory Filings Module, firms can log, track and manage all filings and disclosures from a single dashboard, creating calendar tasks and setting reminders and alerts on the Axiol platform. Recurring tasks can be created with set due dates, reminders and escalation options. Each report or submission can be linked to supporting documents, notes and a status to ensure nothing is missed.

Custom forms can be used to collect data, and filtered dashboards give compliance teams and leadership instant visibility over what is due, what is late and what has been filed.

Lessons Learned From the Strowz Case

Strowz Ltd failed to meet even the most basic of expectations for regulated firms. The failures of the firm can only be described as systemic. From poor record keeping and inaccessible data to a culture of evasion and a breakdown in client asset protection, the firm triggered a plethora of regulatory red flags.

Failures like these were preventable. Axiol enables firms to embed robust compliance oversight and comprehensive risk management into their daily operations to reduce regulatory friction, build a transparent culture and create a demonstrable trail of evidence.

Axiol is targeted compliance by design and has been developed by market practitioners to withstand regulatory scrutiny, in an industry where compliance is not optional but a crucial part of ensuring consumer safety.

To find out more about how Axiol can enable robust risk and compliance management, visit our website or contact us at info@axiol.com for more information and to explore how we can help you achieve seamless, efficient regulatory compliance.