Graeme Stewart Compliance Update

Agenda Thematic Review Outcomes “2 nd Cycle” Thematic Review Questions 6 Killer Questions Other Developments….

Thematic Review Outcomes Need to show clearly Restricted or IFA Not all firms were providing clients with charges in cash terms

Compliance Update - Thematic Review Poor PracticeGood Practice A firm used a charging structure that described the adviser charge as a minimum of £1,500 and a maximum of £5,000 with no additional detail. A client would be unable to apply this to their own circumstances and assess what the likely adviser charge may be. A firm used a range of cash examples linked to how much a client wanted to invest. It gave scenarios of investing £20,000; £50,000 or £100,000. We felt that a client who had this information would be better able to understand what the costs are likely to be for their particular financial situation than if they had a single example that might not be so relevant.

Thematic Review Outcomes Good practice A firm used an individual “letter of engagement” setting out what services it would provide the individual client and the adviser charges (in cash terms) that applied. The firm required the client to sign the document to signify their agreement to the charge before work began. This ensured that the client was clear on the cost of the service and the service to be provided Paradigm Compliance Manual Chapter 4 Appendix 3

Thematic Review Outcomes Not all firms were clearly showing what On-going services they would provide Remember to highlight how to cancel any on-going service

Thematic Review Outcomes Timing Provide in good time before advice or charging starts Hourly Rates Use cash terms, give examples show breakdown

2 nd Cycle Thematic Review Questions Has the firm carried out an exercise to identify its retail target market for RDR products? At what stage of the advice process do you disclose the firms independent status or restriction? How do you disclose to individual clients what the specific adviser charges will be?

2 nd Cycle Thematic Review Questions What on-going service(s) do you provide to clients in consideration for the on-going adviser charge? Do you have a process in place to notify clients of the on-going adviser charge on a regular basis (where the charge fluctuates and / or client is paying via facilitation)? Where you provide on-going service(s) for an on-going charge, how do you ensure that clients receive that service?

2 nd Cycle Thematic Review Questions Where you provide on-going service(s) for an on-going charge, how do you ensure that clients receive that service? Paradigm’s interpretation…. How do you evidence your clients are getting this service?

Chapter 6 Appendix 16 ~ On-going servicing We launched this some time ago, not much evidence it is being used in the field, let us help you….

Findings Lack of knowledge… different staff had different opinions on how the on-going proposition reviews were carried out Lack of consistency… some firms not following the review procedures that they have developed in every case Lack of evidence… files not documenting an audit trail/ evidencing that the review has been carried out

Findings Valuations being issued but not all clients being invited for a review meeting when on the same level of service (adviser didn’t think there was any new business to be had) ATR questionnaires, were issued to clients for completion but no process for ensuring these were completed and returned, reports stated that ATR had been discussed / confirmed however there was no evidence of this on file Fact Find Updates confirming “nothing changed” when it was clear from the file that advice had been given and things had changed Management Information showing clients reviewed, but there was no MI for clients that have declined or not responded Inconsistency review meetings were recorded on paper/ a Fact Find/ an update Fact Find, with squiggles and lines which were not clear to a third party

Findings Several client file reviews, showed that the review had taken place, well after the annual anniversary A few firms had started to receive complaints from clients, who complained that they had not received the service that they had been promised Several firms have been able to show robust processes and systems in place to evidence that the on-going service can be evidenced

T & C Changes we have made to help you Pre - RDR T&C KPI Benchmarks Provider Spread Product Spread NTU/ NPW Persistency Post - RDR T&C KPI Benchmarks Annual review / ongoing service Model portfolio fund switching Service propositions WRAP Adviser charging by facilitation

Let us help you Record your propositions consistently Audit your review procedures Help put in place new procedures/ training

BRAW Update All Paradigm firms safely through assessment (to date) Our firms in Doncaster and Nottingham are currently going through process

Killer Questions Answers are either (a)Yes Definitely (b)Yes Probably (c)Yeah Right!

Killer Questions 1. Do your (and all adviser in practice) CPD records show that you are able, willing and demonstrable competent to advise on the 8 RIP’s, National Savings and Cash ISA investments? (a)Yes Definitely (b)Yes Probably (c)Yeah Right!

Killer Questions 2. Do your Client files show to a third party unbiased and unrestricted research and discount the relevant RIP’s (a)Yes Definitely (b)Yes Probably (c)Yeah Right!

Killer Questions 3. Does you firm have evidence of the training provided to advisers in the using you post RDR Disclosure Documents? (a)Yes Definitely (b)Yes Probably (c)Yeah Right!

Killer Questions 4. Can your firm evidence how you deliver the on-going service each client has been promised? (a)Yes Definitely (b)Yes Probably (c)Yeah Right!

Killer Questions 5. Did you adapt your client agreement following the guidance in Target? (a)Yes Definitely (b)Yes Probably (c)Yeah Right!

Killer Questions 6. Are you ready for BRAW? (if completed BRAW, have you now fully debriefed) (a)Yes Definitely (b)Yes Probably (c)Yeah Right!

Killer Questions All or mainly A’sCall your BC and we will be delighted to confirm All or mainly B’sCall you BC and we will help you close any issues All or mainly C’sHave a lie down, then call your BC

Other Developments… Communications Alternative to Independence Checker Disclosure Documents

Killer Questions All or mainly A’sCall your BC and we will be delighted to confirm All or mainly B’sCall you BC and we will help you close any issues All or mainly C’sHave a lie down, then call your BC

Other Developments… e mail – Website -

Best Practice Forums 165 attended (164 said they would come back) More than 1 in 3 gave 5/5 for quality and 5/5 for value Advisers/ admin/ Para-planners most welcome

Thank You