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The final hurdles

Just when the FSAVC review finishing tape is in sight and you are coasting to the line, do not forget there are still a couple of hurdles to clear.

As the next date for disk and paper returns to be in is May 10, now is a good opportunity to remind firms that a race is not won until you have crossed the finishing line. The review of FSAVC business must be completed to standard and on time – and you must let us know about it.

Among product provider firms – and that is where the bulk of the cases are – progress has been quite uniform. At the moment, the median number of cases completed is 52 per cent and most firms have completed at least half of their cases.

Importantly, most of the research into the outstanding cases has been done, which means fast progress over the next couple of months.

Half a dozen product providers were lagging behind the rest in March. The FSA met with the top management of the firms concerned to stress the importance of hitting the targets. We have worked hard with the ABI and others to make the FSAVC review as user-friendly to firms as possible. We gave the senior management of the laggard product provider firms a fairly frosty reception.

So far, progress by IFA firms has been patchy. There are about 1,400 IFA firms with at least one FSAVC case to review. It is fair to say that some firms have been struggling to meet the standards laid down in the guidance while others have made reasonable progress or have almost finished. But the information we have indicates that the majority of small IFA firms still have some way to go.

As at April 10, the median completion rate among large and medium-sized IFA firms was 34 per cent but this figure masks a very wide range of results. The best-performing firms have already completed over 90 per cent of cases while there are a few firms which have yet to complete even 10 per cent.

It is hard to see how the senior management of such firms could expect to meet the minimum standard of completing 90 per cent of cases by the end of June. We will be taking a significant interest in what the firms at the back of the pack have been doing and our supervision teams have been visiting some of them recently.

We also know that a lot of small IFA firms appear from their reports to have stopped work before the finishing line (shades of the 1956 Grand National runner Devon Loch). This is of concern as the target date of June 30 for 90 per cent of cases to be completed is just round the corner – and this target applies to all firms. Such sluggish progress appears to be down to one of two reasons.

Many small IFA firms have done what was required but have simply not told us. That is to say they have concluded the review with either an offer of redress or a letter to the consumer explaining that redress is not due (the outcome letter).

Our data for the number of cases completed is based on firms putting the date they sent the outcome letter in their progress report. So the obvious message for those who fall into this category is send in your return with this key date to tell us that you have done it.

Other small IFA firms think they have done what was required but have not in fact done it properly.

It is likely that some firms are closing their files too early without sending an outcome letter.

The most obvious case of this type is where the firm concludes the sale was compliant. As well as being in breach of our reporting requirements, this leaves consumers without important safeguards – not least of which is the opportunity given in the outcome letter to question the firm&#39s decision.

The outcome letter should outline details of the Financial Ombudsman Service, which is why we regard failure to send this letter as a serious shortcoming.

In short, it is not enough to deal with something to your own satisfaction if you have not let the investor know your decision and his or her rights.

We realise that some firms may be struggling to juggle the review with their other business priorities and so this is impeding their progress. But there are some other firms that have just not made good enough progress.

These firms still have time to deal with many of their cases – and they must. We want to help and encourage firms to complete the review on time and to standard. But if some firms – be they product providers or IFAs – are not prepared to make the effort to do it, meaning that consumers are not getting a fair deal, then the FSA has an extensive range of powers available to it and is not frightened to use them where appropriate.

Time, however, waits for no one and we have written to small IFA firms recently with a checklist of steps that they should take. May 10 is a key date because that is when firms which report on paper or on disk have to send in their progress reports.

Half of all IFA firms with cases in the review submit a report online, which is an approach that we pioneered for the FSAVC review and that we expect to roll out across much of the FSA&#39s reporting in due course.

Those firms which are surfing the net and using the online reporter must remember to log on and update your information to let us know the outcome of the cases you have been dealing with.

For the rest, remember that the post office closes at lunchtime on Saturdays.

So, to draw a line under the review, may we encourage you to tick off the checklist and make sure that you do not trip up just before the finishing line.

If any firms have any queries relating to the FSAVC review they should call the FSAVC helpline on 020 7676 3060 or contact the review team at FSAVC review team, 11th Floor, Financial Services Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS.


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