As an advice business owner, there’s nothing you need more than peace of mind that your past advice isn’t going to lead to customer complaints in the future or lead you into regulatory hot water. And what’s the primary tool that every advice firm has to provide confidence in their back book?
The humble file check.
Now, we’ve all heard of the iron triangle. You can have something good and cheap, but it won’t be fast. Or you can have something fast and cheap, but it probably won’t be good. On the other hand, if you insist on having something good and fast, then don’t expect it to come cheap.
When it comes to file checking, the rules of the iron triangle apply here too. But if you have to pick only two, which should you choose? Let’s look at the risks and rewards…
Quality compromises
Quality should really be your number one priority when it comes to file checking. The point of file checks is to give you confidence that the business you and your advisers are writing will stand up to regulatory scrutiny and won’t come back to bite you in years to come via a customer complaint.
Accurate files checks will also help you to understand the competency of your advisers and detect whether additional training is required. To give you this security, you need to be avoiding light-touch reviews.
Remember, the FCA often uses a sample check of files to assess the quality of advice provided by your firm, so it needs to stack up. They don’t just look at whether the suitability report looks right, but also suitability of advice, completeness and disclosures. That means your file check should be equally as thorough.
Speedy returns
Speed is usually essential to provide a smooth customer service for your clients. You don’t want to be waiting around for weeks on end for a pre-sale check. Likewise, you want fast post-sale checks too - if there’s a problem, the earlier it’s dealt with the better.
File checks that are turned around too fast should be viewed with some skepticism as they’re unlikely to have had a thorough check. Ask your provider what their process is for checking – if it sounds light-touch, then it won’t give you adequate protection.
You get what you pay for
A cheap file check is unlikely to be thorough. There’s no getting away from the fact that a file check is a manual review by a competent and qualified human being. If it’s good quality the reviewer is not just ticking boxes, they’re using their experience and judgement to make sure you are protected. And this takes time to do properly.
Some firms understandably have cost constraints and become dazzled by the cheap prices offered by some. Cheap or bundled file checks are highly likely to be making compromises somewhere. So, if you come across this, question who is carrying out the checks, what are they checking, how long are they spending on your reviews and what you get back in return.
In the long-run cutting corners with cheap file checks can lead to re-reviews, customer complaints, costly past business reviews and even regulatory intervention.
Peace of mind
Some firms will tell you they can do all three – good quality, fast and cheap - but in our experience the cost of file reviews is driven by the cost of resource. And you can only shave off cost by cutting corners somewhere. It’s maths, plain and simple.
There’s nothing worse than a false sense of security. If you’re getting super cheap file checks, consider if you’re getting the right level of review. Good, in-depth file checking should give you the professional reassurance that your business is protected, enabling you to grow with confidence.