FCA rules out standardised fact finds

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The FCA has ruled out introducing a mandatory standardised fact find for advisers.

In a guidance consultation this morning, the regulator said that the length of the fact finding process can add to the cost of advice, and could discourage clients from switching advisers because they would have to go through the process again.

Last year’s Financial Advice Market review recommended that the FCA look into how to make fact finds more ‘portable’.

While a format for objective information like a client’s name and address could well be standardised, the FCA believes that attempting to standardise the subjective information in a fact find such as attitude to risk and investment knowledge would prove too difficult to enforce on advisers.

The FCA says: “The qualitative information may present greater challenges in terms of standardisation, because the manner in which this is collected is generally determined by firms’ methodology for assessing the qualitative information. For example, firms assess attitude to risk in very different ways. So, a firm that uses a question and scoring system to analyse their clients’ attitude to risk will collect information in a format supports that process.

“Information collected in this format might be of limited value to a firm that assesses attitude to risk using a different methodology, such as psychometric testing. In those areas where the format and content of the fact find are determined by a firm’s internal processes, it is difficult to prescribe a universal fact find without also requiring that firms adopt similar processes which we consider would be disproportionate to any benefit that might be achieved.

“Given the challenges of designing a standardised proforma for the qualitative elements of the fact find and the high existing levels of consistency in the objective elements of fact finds, we do not intend to introduce a mandatory standardised fact find at this stage.”

The FCA’s consultation on the guidance, which also includes updates to its thinking on streamlined advice, is open until 11 July.