Good documentation can reap benefits

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I am writing about the article ‘FCA says you must document rejecting insistent clients’ (FTAdviser, 26 November), following comments at a conference for the Institute of Chartered Accountants of England and Wales.

The FCA said their concerns in the past about advisers denying clients access to pension freedoms have stemmed from poor documentation.

A quote in the article from Ritchie Thomson, manager for retail investment themes in the FCA’s supervision investment, wholesale and specialists division, said: “The risks must have been properly highlighted to the client, advisers sometimes fall down in recording this.”

At my firm we record client interviews, which has got to be a much better way of documenting what both parties actually say and do, and it demonstrates intent, tone of voice and so on, which a typed suitability report cannot do as it is a one-way conversation.

For us it was the only way we could reject a complaint which had come in from an ex-client’s solicitor rather than Fos. While the suitability report supported what we said rather than what the ex-client told her solicitor, we all know that the Fos seems to believe the consumer over the adviser, so when we played the recording to the solicitor who had made statements of fact on behalf of his client we could refute, they rapidly distanced themselves from the former client. This ex-client then complained about her new adviser and the solicitor themselves.

It is funny really, as the client had over £450,000 on deposit with Northern Rock before its collapse. I recommended a low-risk portfolio as the FSCS only protected Northern Rock deposits to £32,500 at the time; the markets dropped and her portfolio fell by about 5 per cent before recovering, and she complained despite the fact it recovered. Had she not followed my advice, she might only have got back £32,500 of her £450,000.

Phil Castle


Financial Escape,