Regular reviews of products and advice given

Rebecca Prestage, head of policy of The Consulting Consortium, says once or twice per year is common for fairly straightforward cases, but a review should always take place if there is a change in the client’s circumstances.

Simon Thomas, head of policy for Tenet, states the respective service proposition agreed with the client should state it reviews are quarterly, half-yearly or annually.

However, Mr Thomas adds it is important to decide what would be the other trigger day-to-day events that may affect the frequency of reviews, such as concerns about a product.

“Keep an eye out for these trigger events and apply basic business replacement rules for the client.”

Stephen Gazard, managing director of Sesame Bankhall Group, argues the frequency of reviews will depend largely on the products in which your clients are invested and the nature of your service.

For example, he explains a client invested in self-balancing multi-manager funds was unlikely to need these reviewing as often as a client invested in single-asset funds, where the overall risk of the portfolio is likely to alter over time.

Other factors to consider are the consumer’s needs, objectives and desires, while also taking into account their age and time until reaching their investment goal.

“We would suggest that generally you should conduct some sort of review at least annually to check that your client’s objectives and circumstances haven’t changed and that their investments are performing as expected, although this need not be a face-to-face meeting.

“Overall, you should ensure that your ongoing service proposition is appropriate for your client’s needs and circumstances – so carrying out quarterly reviews for a client with £5,000 invested within an Isa is unlikely to be in their interests.”

The FCA states in its due diligence guide that you should conduct your own research on products and providers regularly to ensure you are considering relevant products that fit into the scope of your service.

Your fact find should be updated to collect more information if you move into more complex products, the FCA coninues.

In particular, it details the following requirements:

• “Ensure your advisers regularly update their product knowledge.

• “Undertake regular reviews of customer holdings and the advice given in relation to higher risk products.

• “Have appropriate management information in place to monitor the advice given for new or higher risk products.”