How are file reviews undertaken at your firm? In my experience there are three broad categories of file reviews:
New business check
This involves a basic check on the file when new business is transacted. It is often completed by the admin team – or a self-check by the adviser – and is more of a ‘presence check’ than a true file review. The check involves ensuring the right documents – fact-find, product disclosure, research, suitability report etc – are present on file. This can be useful as a basic check but the key point is there is no assessment whether the file has been completed adequately, for example whether the suitability report is acceptable; it just checks the suitability report is on file.
A standard file review is usually undertaken by the firm’s compliance people, either internal staff or a consultancy firm. It is a more comprehensive check to ensure the file meets the firm’s (and FCA’s) procedures. It will cover issues such as whether the fact-find has been completed adequately, that the product disclosure has been undertaken correctly and whether the suitability report includes the appropriate risk warnings. They generally also assess whether the outcome was suitable for the client’s risk profile but they do not generally explore the key suitability issues further.
Outcomes focused file reviews really get to the heart of whether the case is suitable and whether the client has been adequately informed. They go beyond just the risk question to assess whether the solution meets the client’s objectives, tax position and examines whether it is suitable from a cost perspective along with other areas. This approach is the one that is most aligned with the FCA’s focus on outcomes.
Which form of file review is undertaken in your firm? If you don’t undertake outcomes-focused file reviews, or want to learn more about how these should be undertaken, then I have a full day training course to cover this approach. See the training events page for details.