HICS: published for external use

In addition to using HICS internally, we publish HICS to provide transparency of our internal processes – and to provide a bar-raising resource to support professional advisers in meeting their regulatory research and due diligence responsibilities.

Professional advisers are expected to undertake robust issuer / counterparty research and due diligence. The regulatory expectations upon professional advisers are explicit. The following extracts are taken from the FCA Retail Product Development and Governance: Structured Product Review, 2012 Thematic Review:

‘‘Firms should carry out sufficient due diligence into the counterparty and not rely solely on credit rating agencies …’’

‘‘We expect firms to look more broadly than just the credit rating, such as the rating, outlook, credit default swap (‘CDS’) spreads and other market information, as well as ‘fundamentals’ on the issuer’s balance sheet.’’

HICS provides professional advisers with access to multiple, widely recognised indicators of financial strength / credit risk, pertinent to assessing and considering financial strength / credit risk, using a robust methodology, including a scoring system, supporting and provoking more detailed and objective analysis, assessment, understanding including and comparison of issuer / counterparty financial strength / credit risk, supporting best practice professional adviser issuer / counterparty research and due diligence.

So, HICS is important.

Professional advisers using HICS should take the time to look at the ‘HICS: Introduction and overview’ and ‘HICS: Methodology (scoring and weighting)’  presentations.

It is also important that professional advisers using HICS understand what HICS is: and what HICS is not.