Steamlined Advice: Part 2
Introduction to FCA Guidance on the FAMR; Part 2 of 3
The Fact Find and Portability of Data
If a fact finding process is carried out face-to-face, it can be quite a costly process for the advisers. The FCA has recognised that if the time it takes to complete this fact find process is reduced, it would result in a reduction of the costs that could mean lower fees. Low cost, high quality advice is something that the FCA is very much in favour of. Hence the desire for ‘Streamlined Advice’
One cost reduction method that the FCA has noted is the possibility of advisers to use previously acquired and pre-existing information (possibly from other advisers).
The guidance on steamlined advice notes that there is a market developing for third-party services that offer digital functionality. They offer an opportunity to store and manage clients personal information securely. The client may then consent for the third-party to share it with the financial services companies of the clients choice. In this regard the FCA is of the opinion that –
“There is no reason why a consumer’s personal repository of information could not be used, in line with applicable data protection rules, and with the client’s express permission, as the basis for a conventional advice consultation. However, the firm would need to have suitable arrangements in place to confirm the accuracy of the data before it could be used.”
This could potentially be leading to a way for fact finding to become a process that is less complicated, less costly and less time consuming for both the client and the firm. This is what the FCA calls the “portability” of clients information.
The FCA has stated that a firm, while obtaining the necessary information about their clients to assess suitability, is entitled to rely on the information provided by its clients. Unless of course, it is aware, or should reasonably be aware, that the information is manifestly out of date, inaccurate or incomplete. The information that firms collect from their clients to carry out the suitability assessment could include information obtained from a fact find (which has been completed by the client independently at the start of the advice process) or during a previous transaction with the firm or a third party.
If the firm decides to use a pre-completed fact find process, there are different ways the firm can reassure themselves that the information they have obtained in this manner is correct. The FCA gives an example of a firm incorporating into their advice process an explicit opportunity for the client to review any pre-captured information and to record the clients approval/response. However firms must always take care as to how they present these opportunities, they should always be fair, clear and not misleading. The firm must ensure that they inform the client of how the information collected will be used and what the consequences of this will be.
FCA regulated firms should be able to demonstrate that they have appropriate policies and procedures in place to maintain adequate and up-to-date client information. The firm will need to take into consideration that some information may, overtime, become outdated or that in certain circumstances a client will need to complete the fact find again.
A firm should have additional processes in place to ensure that it follows up with clients regarding any obvious mistakes or inaccuracies it finds in the information received from any client.
Regardless of whether the information obtained during the fact find process comes from the clients themselves, a third party provider (such as a digital storage solution), etc, the important part is that the information obtained is reliable, accurate and up-to-date.
How can RiskSave help?
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Please also keep an eye out for part 3 of this series.