Example: 1 

You will need MI to be able to demonstrate that you treating your cusomers fairly.

In a firm, an adviser completes documents which demonstrate the reasons for a recommendation for every sale.The firm’s compliance function reviews the documents and returns them if they are not of a sufficient standard.

The firm believes this allows them to prove they are treating customers fairly.

But management information reveals:

• only 95% of sales are documented;
• only 80% of sales documentation are reviewed; and
• of those that are reviewed;
  • 28% have to be returned to the adviser due to lack of information;
  • 3% have serious errors which could mean that advice was unsuitable; and
  • 60% of documentation returned in the last quarter has not been completed.

In this situation, the existence of the process is not enough to demonstrate TCF. The MI shows the true picture and can inform decision making on what further work is needed.

Example: 2

Because of a merger, a small firm has inherited a remuneration structure that rewards advisers if they pass a certain target. Because this means that a single sale can significantly increase reward, the firm wants to phase out the arrangement. This will happen once a wider TCF review of the remuneration has taken place. In the meantime:

• advisers are subject to spot-checks on files
• advisers near a target threshold are reminded of the need for quality; and
• advisers who exceed the threshold are file checked more often

Useful MI might include:

• percentage of cases which fail suitability checks
• percentage of those where the adviser was close to the target threshold; and
• actions taken against advisers who reached their target through unsuitable sales

This firm could not change its business overnight, but by taking interim actions it helped to reduce risks of the firm not treating customers fairly.

Example: 3

At a periodic review, a firm notices that critical illness cover has been sold to customers whose previous medical history means they, are not able to claim on the policy. The 16% of sales affected was well above the firm target (99% of customers able to claim).

It emerges that advisers are uncomfortable asking questions about this sensitive area. The firm asks for more information and training from the product provider.

The firm reviews all the policies on its books urging customers to check their eligibility. It follows the letter with phone calls.

Eight out of the ten advisers receive extra training within three months, with the rest scheduled. This is noted in their training records. New policies are tested and only one out of 30 does not meet requirements.

Of the firms written to, 20% responded and their cases were reviewed, with 75% getting a premium refund. The result matched up broadly with their original 16% and the firm was happy it had taken all reasonable action.

The firm undertook a 'lessons learned' exercise to identify how it could avoid this issue in the future.

MI is needed here to show that advisers have received the training needed and also to show that all customers at risk were contacted.