Compliance should be central to the work of the financial adviser. There is also the requirement for advisers to produce reliable financial information in a short timescale and report it to the FSA. But it need not be a burden if your daily routine takes account of compliance requirements.
So what does compliance mean? Compliance has many parts, but ultimately, the regulators want reassurance that advisers are doing their job properly. This involves looking after your clients well and fairly, giving good advice, following procedures and providing compliance information when requested.
More and more compliance is being checked from a distance. This has been made possible because of the ability to access clients’ details and documents via the internet. Compliance managers can access these client and business details and advise on how to set up compliance checklists, which are used to monitor whether clients are treated fairly and that procedures are being followed, without having to visit the adviser’s premises. It is essential that they find it easy to use the software and that the details are easy to access and comprehensive.
There is a potentially enormous amount of paperwork involved in servicing clients and ensuring that records of advice and sales are available. For an adviser, keeping on top of this paperwork to meet all the regulations can be a major administrative headache. If used properly, software can significantly reduce this admin burden – the information needs to be properly managed.
In the past, most information has been stored on paper in filing cabinets, but this can make pinpoint retrieval difficult. Correspondence, scanned documents, notes, emails, faxes, and even voice recordings are more effectively searched, if entered into the software, allowing for them to be properly indexed and retrieved at the touch of a button. Examples of useful indices which can be used for future searches are the client, policy, provider, type of contact or document, description, date, administrator and consultant. For example, when looking at the events associated with a policy, the proposal date, which is linked to the new business register, KPIs, is attached to the proposal documents.
Starting afresh
Compliance is especially important when taking on a new client and processing any new business – it is important to demonstrate that correct procedures are being followed. One way to keep track of this is to set up compliance checklists. These include the appropriate terms of business letter and proof that the correct documentation is given to the client at the right time. Employers like using checklists, as they help to delegate and to teach staff the required compliance processes.
These are complemented by individual reminders and then each person can tick off their own “To Do” list. For example, a reminder can appear if a terms of business letter has not been sent within a certain period after meeting a client.
As part of this evidence, conversations and events need to be logged. This helps to show regulators that correct policies have been recommended and the associated warnings on policies and the risks involved have been advised. Similarly for mortgages, a search has to be completed to prove the best mortgage has been given to match the client and that completion has been reached as soon as possible. Compliance managers are also very keen to ensure that letters, including suitability letters, are created properly. Suitability paragraphs and template letters can be set to ensure that the basics are included and the correct details are merged ready for personalisation to match the clients.
Setting up the correct format for compliance reports is essential. These can be for the New Business Register, Key Performance Indicators, Commission Splits, Sources of Business and Retail Mediation Activities (RMAR) reporting. Different compliance managers require different formats for these reports, and it is paramount that they are set up in consultation with them. Reports can then be viewed without the need for printing and more usefully can be analysed using the different reporting options such as filtering, grouping, summing, counting and taking percentages.
The ultimate audit trail for all organisations is data backup. It is essential that these are regularly checked and that at least one monthly backup is kept off-site and never recycled.
Working closely with compliance managers can save a lot of time, as it ensures that procedures match recommendations and by enabling them to view client details, reports and documents it allows them to advise of any potential shortcomings.
Compliance needs to happen naturally, and completing compliance functions should be part of the daily routine. This is most easily achieved by ensuring that the routines are set up so that everyone is comfortable using them – this can be done on an individual basis. For example, different checklists can be set up to match each adviser’s procedures and use of the PC.
By ensuring that compliance is part of the daily routine and by using software effectively, advisers can save time on admin intensive tasks, reduce costs, increase efficiency thus having more time to concentrate on the needs of the client and improving the service. n
