Consultant Zone

What do we mean by due diligence?

We were delighted to attend the Global ABS conference in London last month with our sister company Yabber Global. It was great to hold face to face conversations with our existing clients and potential new ones.

We had some wide-ranging chats; so much easier than virtual meetings which in hindsight now appear to be too focused, too narrow and too rigid. Okay, virtual meetings served a purpose and were necessary at the time, but the ability to go off-piste in face-to-face chats again was so enjoyable. One of the areas debated with the visitors to our stand highlighted the fact that ‘due diligence’, ‘reasonable steps’, ‘assurance’ and ‘oversight’ mean different things to different firms and people. Whatever the terminology, how we help firms is clear; we provide expert insight to give firms the clarity they need to fully understand and address risks and opportunities.

Further debates followed around the robustness of the independence of those doing the reviews and oversight. Of course, we chatted around the ‘three lines of defence’ models and the fact that second and third lines are viewed within many businesses as independent, but there was a consensus that however much they tried to maintain an independent persona, they often aren’t truly independent. The remuneration of staff in second and third lines is still dependant on the company’s financial performance. As has been said many times, the staff engaged in the checking process also attend the same summer barbeques and Christmas parties as those they are checking – difficult to argue that they are truly independent, in our opinion.

This is where Rockstead comes in; we have been providing independent review and analysis and providing clarity on loan portfolios since 2008. We have carried out reviews for investment banks, lenders, asset managers and investors on numerous companies, in different asset classes. Nowadays we are as busy helping firms with regulatory compliance, third party supplier oversight, consultancy and staffing services. The Global ABS attendees were regular users of many of our services. If you would like to find out more about what we can do for you, or if you would like to chat about managing and mitigating risk, give us a call.