Rory Percival, FCA technical specialist and former Financial Planner and IFP board member Melony Holman CFPCM, from Compliance & Training Solutions, were the first key note speakers at the IFP Paraplanning Conference 2015.
Using examples of good and poor practice the duo highlighted what to do and not to do, when it comes to writing client reports.
Mr Percival focused on suitability reports and said he hoped to dispel some myths about this.
There are only 3 things that need to be in these reports according to Cobs, he said.
These are:
- demands and needs
- why suitable for client
- possible disadvantages
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He said: "That's all that needs to be in there, yet we have reports with 90 pages long sometimes.
"For most business it is just those 3 areas."
He discussed a letter from an adviser asking him about compliance and reports.
The adviser said he had been told he needed various details by his compliance staff but Mr Percival said a lot of this wasn't necessarily required.
Mr Percival said, for example, that a client agreement shouldn't be necessary as this would be a repeat from other documentation.
On client circumstances the FCA specialist said some, such as objectives, are things that need to be in there but details like how many children and the age of the client are unnecessary.
He said there was no need to repeat details contained in the fact finder.
He said client attitude to risk and capacity for loss was an important aspect to cover.
If a series of reports has been created, as long as it's clear for the client, then planners don't need to repeat points a second time around.
The fund platform recommended is also important to include, he said, but listing alternative products isn't.
He said: "You don't need to do this - it's a common myth - this can be scrapped."
He said it was important to think from the client's perspective. There might be a complex set of charges for various aspects which could be difficult to assimilate for the client.
Therefore he suggested a summary of the charges would be a good practice approach.
Reference to KIIDs and KFDs is not strictly required but probably a good practice idea, as is risk profiles of recommended funds.
Taxation of investments, where this may be to the disadvantage of the client, does need to be included.
Areas of concerns the FCA has, in particular, include poor use of templates.
He has seen objectives listed, which are in fact solution focused rather than the clients' actual goals such as they want to retire with x amount at age 65.
Client objectives should be personal and not templated, he told delegates.
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He said the FCA often sees poor layout like headings at the bottom of the page or a huge block of text which is "a real turn off to read".
He said graphs and diagrams are a good practice way to improve this.
Repetition of details is another common error, he said, adding that in one example a calculation was repeated 24 times.
He stressed it was important to keep details relevant and that he sees a lot of things included that are not.
He said it wasn't about creating a short report but keeping details relevant and avoiding repetition.
The FOS is always brought up as an issue by advisers when he makes this presentation, he said.
Advisers say they include a lot of things in their reports to satisfy the ombudsman.
"People say we have to defend against the FOS," he said.
He said he is yet to find an example that shows it carries contrary guidance to the FCA.
He said: "The difference between the FCA's view and the FOS view is a myth and I'm not going to change that view unless someone comes to me with some evidence."
Asked if compliance officers need educating about the points he made today, he said it there is a job to better inform staff working in this area but also the industry generally.
RDR has, however, "significantly accelerated process of professionalism", he said.
Previous incarnations of the FCA haven't made expectations as clear as it could have, he said. He said the FCA was looking to address this.
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Ms Holman discussed topics such as product disclosure, centralised investment processes and research.
Scores of Paraplanners took their seats this morning as IFP board member Richard Allum kick started the conference, being held today at Chesford Grange Hotel, Warwick.
Later, David Flory from Aegon UK will focus on service including what clients need, what they expect from a Financial Planning service and the impact of recent changes.
He will also look at some of the broader developments across the profession and will try to predict some of the changes that could be seen the future.