You are paying for the recommendations of your consultant, so you should carefully consider what they tell you.

If you are given particular recommendations and you agree that these are necessary, you need to act to implement these recommendations.

We expect firms to implement the advice they are given, if having assessed for themselves they decide it is appropriate.

The FSA is more likely to take action against firms who breach our requirements if they have not acted on previous recommendations from a compliance consultant.

Good practice example

Following recommendations received from their consultant, firm J improved the way they collected “know your customer” information and their filing structure.

The result was better record keeping and more efficient processes. The consultant’s analysis of the firm's procedures also led the firm to improve their processes for establishing a client’s attitude to risk and to write clearer suitability letters.

When the FSA visited the firm it was clear they had improved their compliance and there was evidence that past weaknesses had been addressed throughout the business.

Poor practice example

Firm K's consultant highlighted a number of failings. These were:

• recording insufficient customer information, so that they could not demonstrate the suitability of advice;
• not monitoring the advice given;
• not implementing or following the firm's training and competence regime; and
• suitability letters with inadequate "reasons why" and risk warnings.

 
The consultancy gave the firm a number of recommendations to take action in these areas. The firm failed to act on these recommendations and 18 months later, the FSA visited and identified the same issues. The result was a fine and public censure for the firm. Had they addressed the weaknesses identified by the compliance consultant the firm could have avoided this action.