Adviser workshop: Top tips for client record-keeping

Phil Castle (pictured), Paul Barnard and Arthur Childs give their tips on how best to log client meetings.

Phil Castle

Managing director, Financial Escape

Last year, we had our first complaint (I’ve had my own firm since 1998). This client knew [what they were buying] and their understanding was checked at the time. They had forgotten they were the second client to come to the office following our decision to record all client meetings and landline calls as MP3 or wavfiles.

Their solicitor pursued the claim with all manner of threats and we reviewed the file in the normal way before rejecting the complaint. We reminded the solicitor that the meetings had been recorded and, having documented the times at which each disclosure and question had been raised to refute the complaint, the solicitor went quiet and we heard nothing further. The complainant never took it to the Financial Ombudsman Service (FOS).

Recording advantages

Testing and documentation are all very well, but the good thing about recording is it clearly shows good or bad intent on the part of the adviser and client. It means the compliance function can check for oversights and the adviser can maintain eye contact rather than writing detailed notes. The adviser can check on exact figures and back-office staff can check details. It also means we will only be hung, drawn and quartered for what we are guilty of, rather than on false accusations.

The assessing suitability paper in January 2011 should be mandatory reading for all advising staff; it is common sense, which some firms fail to apply.

In law, what matters is not who you believe but evidence. No evidence, no case. If the ‘making it absolutely clear’ was a recorded meeting with a client’s confirmation of understanding, which is more credible: a signed suitability report or the client’s response in their own words?

The Financial Services Authority (FSA) has extended the requirement for stockbrokers and deal makers to record not only landline calls, but also mobile phone conversations.

At the point of sale or advice, a large number of clients understand what they have been told, but either the client’s memory fails them or a loss occurs and they decide that an easy way to recoup it is to make a false or spurious complaint, believing the adviser will not have fully documented the fact-finding and advice process.

Paul Barnard

Director, Asset Investment Management