Examples of good and poor practice: Investment / Financial advisers
We see these examples as a means of helping you think for yourself about how best to meet our high level requirements within your business. And, by publishing real life examples of practice on either side of the minimum standard, you can see how to draw the line in your business of what is and is not acceptable.
Management Behaviours
Good Practice
- Management introduced a TCF Action Plan which set out specific milestones to be achieved. The plan is constantly reviewed and updated by management as key milestones are reached.
- Management sent a TCF questionnaire to its clients and staff. Results of the questionnaire were reviewed by an independent party and the findings were used to supplement the findings of the firm's gap analysis.
- Management used a customer survey which was geared towards testing the customer's understanding of the product recommended and the quality of the suitability letter rather than focusing on 'satisfaction' alone.
- Management communicated its TCF vision to all staff. To ensure staff understood it and what it meant for them in their day to day jobs, TCF was regularly discussed at staff meetings.
- Management completed an annual training needs analysis for each adviser. This set out training and development for the year ahead. Once agreed, management regularly reviewed progress together with agreed key performance indicators (such as claw backs and complaints) as well as business written.
- Management carried out appropriate risk-based monitoring of advice, taking into account risks of products and experience of advisers.
Poor Practice
- Management could not discuss how TCF fitted into their business and what behaviour they expected from their staff.
- Management not using key performance indicators to monitor advisers to ensure customers were being treated fairly and to identify potential risks.
- Management of firms with multiple permissions not monitoring advice across all areas of the business.
- Management and advisers' focus on training was on achieving 50 hours per year rather than the quality of training.
Sales and Advice
Good Practice
- Comprehensive fact finds were completed to enable the adviser to identify areas of need/priority; the customer's financial priorities; their objectives and what they expect to achieve from the product/investment portfolios; being asked about provision for premature death, disability, income in retirement.
- Advisers talked customers through disclosure documents, rather than relying on them to read and digest on their own.
- Advice on high risk products restricted to a small number of specialist advisers.
- Risk based approach taken to after-sales contact. Customers who were recommended more complex products are contacted more regularly.
- Suitability letter included a short summary of existing investments to illustrate that the advice provided had taken these factors into account.
Poor Practice
- Inaccurate information given to customers about the firm's remuneration or failing to bring to the customers' attention the importance of disclosure documents.
- Inadequate and out of date Know Your Customer (KYC) information for customers who have an ongoing relationship with the firm.
- Attitude to risk not being explored with customers and no record being made of the decision reached.
Complaints Handling
Good Practice
- Management carried out an analysis of each complaint to establish if there is anything which points to a weakness in the firm's processes.
Poor Practice
- Staff not trained on how to identify a complaint and what to do if a complaint is received.
- Complaint handled by the adviser who gave the advice rather than an independent party (where it wasn't a sole trader).
