This is not a case of the goalposts being moved or of retrospective compliance. The quality of those files was poor and the cause was manifold, such as:
• A lack of understanding by the advisers of the rules.
• A lack of research regarding the benefits available from ceding schemes.
• A lack of consideration of alternatives.
• Clients’ objectives not being clear.
• Paperwork generally incomplete.
The FCA ran a whole set of positive compliance workshops to try to educate advisers as they took the opportunity to publicise their findings from the thematic review.
In the rush to increase their numbers, networks inadvertently took on advisers alongside the liabilities they had built up over time. These days much more due diligence is undertaken in the recruitment process. Also the networks provide a CPD structure to ensure that the advisers are maintaining certain levels of competence. The networks have a lot of knowledge resource and run training in many aspects of financial planning.
Unfortunately, in my experience, the compliance is still not properly focussed. There is still too much tick-box compliance. The file checking is stringent, but focusing on the wrong emphasis. Notwithstanding the continued guidance from the FCA, the suitability letters are still far too long and obviously templated. Therefore, not treating customers fairly.
The people running the compliance functions seem to design forms and processes that are difficult for the advisers to follow and positively unpleasant for customers to experience. They seem to have little experience of the advice process either as advisers or clients. If a process is difficult, the advisers will not want to or be able to follow it.
Networks are improving, but they are still several degrees away from providing the help that advisers really need to enable the writing of consistently high quality business that provides good client outcomes that the FCA demands.
Tony Catt is a compliance consultant
