DO YOU REALLY KNOW WHAT YOU’RE PAYING FOR IN A FILE REVIEW?

Small lapses in documenting advice have a habit of showing up long after dealing with the client. Most of the time, they will surface in later advice cycles, but they can also hit without warning, for example, when there is a complaint or you’re trying to sell your business.

Those minor omissions are usually made because they felt trivial in the moment, but often they interrupt the story of how the recommendation took shape and can truly make or break a case. 

A full file review helps cover your back from exactly that. You may feel it is all about picking your case apart, and to an extent this is true, but it’s for good reasons. The finer points that often sit quietly in the background are often the ones most easily forgotten, but they’re also the ones that will ultimately form the backbone of the client outcomes when it’s virtually impossible to spell out every possibility in your suitability report. 

Different firms, different expectations

When firms come to us, they don’t always want the same thing. Some need a suitability check to confirm that the advice is appropriate at a high level for reassurance, whereas some prefer a full assessment that will check case’s every nook and cranny and look for every possible risk or gap.  

Ultimately, what a firm will need will depend on their wider risk framework. The important thing is that firms understand what they are choosing and what level of scrutiny they genuinely need. A surface-level sense check may be adequate in some specific instances – but it’s not going to leave the same certainty as a review that digs deep into the reasoning behind the advice and challenges it while there is still time to make good for any errors. 

Why the detail still matters 

The FCA hasn’t changed its expectations around suitability. If anything, they continuously reinforce their stance on advice issues.  

The issues we see aren’t usually dramatic errors. They tend to merely leave gaps in context or present inconsistency, sometimes the issues only become obvious when you get a second pair of eyes to look at your documents. For example, information about a client’s circumstances may be mostly complete, but missing that one detail that would tie their financial position, objectives and recommendations together. More often than not, the adviser will know that one specific detail that brings everything together, but it doesn’t make it into writing. 

On their own, these may seem like small gaps. Collectively, they can leave some critical questions without an answer, leaving the recommendation open to a challenge. 

The issues we encounter are rarely dramatic. They tend to be small gaps in context or minor inconsistencies that only become obvious when someone else takes a fresh look. You might have nearly all the information about a client’s circumstances, but missing the one detail that brings their financial position, objectives and recommendations together. Advisers often know the linking detail instinctively, yet it never makes it onto the page. 

Individually these gaps feel inconsequential. Collectively, they leave important questions unanswered and make the recommendation vulnerable to challenge. 

Risk assessment: Where things often drift

Risk assessments illustrate this well. Most of the time, the risk profile recorded aligns with the wider client information. But every so often, the outcome doesn’t fit into the narrative, and the discrepancy isn’t questioned. Often the adviser understands the client well enough that the inconsistency doesn’t feel significant in the moment. But it won’t always be immediately obvious to someone who doesn’t have the same relationship with them, or even the clients themselves, as they will often rely on advisers to gain an understanding of what’s being discussed.   

This matters because two clients with in a similar financial position can have fundamentally differing goals, and no two individuals will react to risk in the same manner – so even if they tick the same boxes within your risk questionnaire, these responses will come from a different place. When the balance between appetite, tolerance, need and capacity is clear, justifying a specific course of action becomes almost a formality. 

A comprehensive review will highlight those points so that the adviser can gain this perspective. It’s less about correcting errors and more about making sure that anyone looking at the case can understand its ins and outs for that client and their circumstances. 

Communication and coherence

Suitability reports tend to be strongest when they mirror the way advisers speak to their clients – straightforward, specific, and focused on what matters. Where problems arise is usually in consistency. No matter how neat the report is, if the information presented contradicts other areas of the case or leaves unanswered questions, clients are at risk of agreeing to something they don’t really understand. 

But the presentation plays a role too. A well-structured report helps ensure that you’re leaving no room for misinterpretation when someone unfamiliar with the case looks at it, whoever they might be. Keeping things in order will bring the key points that support the outcome into focus. 

What a thorough file review gives you

A detailed file review is not simply a necessary evil. It helps give you confidence that the story you’ve written about your client is complete, coherent and can stand up to scrutiny in those more stressful moments. It helps firms spot weaknesses before the regulator or a complainant does. And it encourages better conversations with clients, which usually leads to better outcomes all around. 

If you’d like support ensuring your file reviews are thorough and aligned with best practice, don’t hesitate to contact us on (0161) 521 8641 or email: info@b-compliant.co.uk