How many files should I be checking? I only complete prime cases, so do I need file checks? Will the FSA expect to see file checks as part of the current Business Risk Assessment Workshop (BRAW)? Is it now easier to complete a compliant file as the industry has restricted the higher risk products?
So is it easier to complete a compliant file? You could argue it is with no more self certification and restrictions on interest only cases. However what makes a file compliant or not, is not down to the product type and criteria available but down to the adviser completing it, the standard of the paperwork used and the supervision checks that are in place. Even a status/prime mortgage file can be non-compliant!
Adviser understanding
Even the most experienced adviser can get it wrong; this is not down to a lack of knowledge and understanding but more commonly down to bad habits or mis-understanding. When we look after newly authorised firms we always try and push the benefits of having the correct setup and understanding from the outset. Sometimes these issues have been caused by previous supervisors, previous compliance firms or just an incorrect interpretation of the FSA rules.
Paperwork
Far too often we see failures in the standardised paperwork the firm uses. You would expect all firms to be using a compliant IDD or CIDD, but content, format and wording especially with regard to fees still cause problems. If the general file paperwork falls short compliance wise then every completed file will include errors. Does your fact find capture sufficient information? Do you use a fee agreement or suitability letter and are these compliant? A compliant set of documents also ensure that the relevant details are gathered and presented to the customer in a clear and non-misleading way.
Supervision
It’s important that some form of supervision is in place, not just for multi adviser firms - as a sole trader how do you know your files are compliant? Have you had any external checks? Lets face it paperwork is dull and for an adviser it’s usually a chore, so an unsupervised adviser is more prone to cut corners than ensure files are completed to a high standard. Supervision is based on the adviser’s competency, but even a fully competent adviser can develop bad habits, forget to complete items and, at times, be unable to demonstrate appropriate advice has been given. Routine checks are therefore very important, not just files but checks on competency and a review of management information.
H3 Members - for a more in-depth guide on the common files errors click here
How many files should be checked?
The FSA expect a firm to have appropriate systems and controls in place to ensure ongoing compliance and that you are treating your customers fairly. They would expect file checks to be focused on higher risk cases and whilst they don’t set any level, from experience they often consider that a minimum 10% of files should be audited. For a non-competent adviser undergoing training they should initially have 100% checks (and preferably BEFORE the advice is given). As their experience and knowledge improves this level of checking can be reduced. We would usually recommend a sliding scale of checks from 100% down to a minimum 10% once fully competent.
It’s just as important to have files checked now as it was pre ‘credit crunch’. When you carry out a gap analysis audit, it should highlight the level of file checks you have done and if this area needs to be reviewed, file checks are an important tool in highlighting business risks and so will therefore fall under the current FSA’s BRAW review.
It’s important to check ‘in progress’ cases and not just rely on completed ones. Often a level of “tidying up” is done following completion and so by checking the file before offer for example you will get a better view of how well the sales process is being followed and if the paperwork is being fully completed at the time.
What can we do to help and how does this benefit me?
Checking files can be time consuming and you can never be sure if you’re checking everything that’s needed. If you are a sole trader or have never had any external checks how do you know if your documents are compliant?
We have a vast amount of experience in reviewing mortgage and insurance files, we’ve witnessed and know exactly what information the FSA check on a file and so make sure every file document is checked and cross checked.
We offer great value file checks, we have no minimum requirements, we don’t tie you into any contracts and so if you only want one file check or need regular file checks we can help.
Your files can be checked on site or remotely. Remote files can be collected and returned by courier, or sent electronically. Once checked you will be provided with a detailed report of the findings and any failures, we will highlight any document shortfalls you may have and more importantly let you know what can be done to correct the errors from occurring again.
Having an external check can often highlight errors and shortfalls that are overlooked with in-house checks. You may want a single file checked to make sure you are not missing anything or may prefer a regular file check service – whatever your requirement we can help.
Get peace of mind - we audit your standard documents when checking the file and will highlight if any changes should be made to reduce the risk of compliance errors, reduce the likelihood of a customer complaint and improve the clarity of your documents.
Find out more and get a quote
Just complete our online quote page or drop us an e-mail or call with your file check requirements, type of file, quantity etc and we can provide a no-obligation quote.