Advisers using detailed file notes instead of fact find documents are likely to fall foul of the FCA’s new assessment framework.

We are recommending firms download the new Retirement Income Advice Assessment Tool (RIAAT), as it will be used as a benchmark against which files are reviewed.

Our director, Vicky Pearce, said: “The FCA has published the RIAAT to help firms understand the methodology behind file reviews. We are finding in cases where advisers are still relying on detailed file notes, the information is extremely challenging to find. This could result in a non-compliant decision, should the regulator check the file.”

The RIAAT was introduced at the end of March, following the FCA’s thematic review into retirement income advice, but it has relevance across the advice spectrum.

Vicky continued: “Although the COBS rules don’t specify the use of a fact find document, we believe it is now the only way to ensure firms are collecting the level of detail set out in the RIAAT. It is a snapshot of the client’s life at a specific point in time, which provides easily accessible data that can be updated at regular intervals.

“Advisers who just use file notes to gather KYC, rather than a more structured fact find document, tend to add to them during the course of their client relationship, making it difficult to extract the required information and justify how up to date it is. We have heard it argued that completing a fact find with a client can be a barrier to building relationships, but an informal conversation isn’t likely to cover all of the information the FCA requires in a file review. We’re not saying don’t have these chats with clients, but that they should supplement the fact find document.”

If you are still using detailed file notes, we would urge you to download the RIAAT and ask a colleague to complete it, to establish if the relevant information can be extracted efficiently to allow them to assess the suitability of the advice given.

Vicky concluded: “The FCA is trying to improve standards across the consumer investment market and accountability has never been more important. Now more than ever, we have a clear understanding of what the regulator is looking for following the introduction of the RIAAT and those who choose to ignore it do so at their peril.”

For more information about assessing past files against the RIAAT, don’t hesitate to contact us.

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