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FCA rules out standardised fact finds


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.



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. As far as I recall, the salient point regarding fact finds was that firms should be able to take copies of other firms’ fact-finds as read, instead of having to start all over again just to ensure that everything as in your own format. Join that idea up with distributed ledger technology and you could have fact-finds completed by clients just by virtue of designing technology to draw together all the information from private sector and public sector sources which is already known about them which is already “out there”. They are happy to consider this technology for anti-money laundering purposes, so implementing it to make one less significant time and cost barrier for those who are finding it hard go access advice seemed like an idea at least worth further investigation. Oh well.

  2. Am I right in thinking…… that a “fact find” is not a reglatory requirement ? but know your client is ?

    If this is the case then in this case I think they are right !

    Cutting corners, (basic question and answers, pre-loaded algorithms etc etc) very rarely end up with a good “know your client” senario !

    I do however use a, risk profile question and answer tool which forms a basis of a detailed conversation….. and I can quite honestly say 7 times out of 10 the risk catergory changes (up and down) from what has been churned out by the risk questionaire !

    There really are to many key variables

    • You are so right. These formulaic fact finds are not for the benefit of the client but for the compliance department of the larger firms. I have seen so many of these and at the end the adviser still doesn’t really KNOW the client. I think the Regulator has at last realised that it is all this hoopla that deters many clients from moving or even from engaging in the first place. This is compounded by firms charging by the hour and taking 3 hours or more asking questions that many are not comfortable answering to a strange new adviser. Many find it intrusive.

      As to risk questionnaires – these are useful if only to demonstrate the anomalies which are thrown up. I have come across those who maintain they are low risk, but own direct equity portfolios in all sorts of ‘interesting’ companies, to the client who told me he doesn’t mind taking a risk, provided he doesn’t loose money!

  3. Why waste time on considering a standard fact find when for advisers a standard comprehensive reply to an authority asking for an existing client’s existing pension details is all we want.

  4. As long as the adviser can provide documented evidence of complying with KYC, it doesn’t really matter what fact find or other evidence is used.

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