Positive Compliance: Episode Four

Like the previous articles in the ‘Positive Compliance’ series this article has been drawn up by collating information from various sources following the FCA’s well received Positive Compliance workshops. It should be read in conjunction with the previous three articles.

There should be no surprises in the article below, but we strongly recommend that all principals and advisers should read the articles carefully as a useful reminder and ensure any gaps highlighted are addressed.

Remember the client’s best interest rule and positive outcome for clients are cornerstones for every case.

What the FCA look for in a file

General Expectations 

  • All key documents should be on file;
  • Sufficient personal details should be recorded to support the advice;
  • The clients ATR should have been assessed;
  • The FCA will look at different advisers to ensure there is a consistent approach to recording and assessing ATR;
  • The FCA would look for evidence that the firm identifies and checks high risk business.

Income Drawdown

  • There should be sufficient evidence to support the level of income required;
  • This evidence could include a full Income and Expenditure analysis;
  • There should also be sufficient evidence to support the need for, and the amount of, tax free cash;
  • Other post retirement options should have been explored and discounted;
  • The GAD review process should be mentioned in suitability reports;
  • If a SIPP drawdown has been recommended it should be clear why this is the case.

 Pension Switching

  • Full details of each ceding scheme should be looked at and analysed individually;
  • Full details of the receiving scheme should be on file;
  • The ceding and receiving schemes should be compared to support suitability;
  • Any loss of benefits should be explained;
  • An explanation why stakeholder has been discounted should be in the suitability report;
  • Commitments to review the receiving product should be documented. 

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

The FCA has given a clear indication of what they expect and will be looking for when they visit firms. Be prepared and ensure your standards match their expectations.

Action Required By You

  • We strongly recommend you review your internal systems to ensure all of the points raised are being addressed;
  • Most of the feedback should cause you no surprise but you should nevertheless read through the points listed and mark each one with a tick (hopefully), a question mark (requiring clarification) or a cross (requiring action);
  • Discuss the findings with the senior management team and of course document the discussions and outcomes;
  • Ensure all advisers and staff involved in these areas are aware of the content of these Newsletters;
  • Discuss findings with you ATEB consultant and arrange a focussed audit if appropriate. 

 

About the Author

Steve is an ATEB Director and has a deep understanding of all matter regulatory, built up over his 30 years + in the industry. With a training background and a technical brain, he overseas numerous complex projects and client implementation work.

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