Super quick guide of IFAC findings from the last quarter…in general.
Now for the official guide for compliance directors to study…see below
By Kirsty Turner
In this PAPER we aim to highlight areas of concern where errors have been noted, which have resulted in a remedial action being required. These fall within the grades 3 to 6. This information is aimed to assist in File Excellence requirements.
Download only available for members of IFAC using the BAT system. (bad luck)
Unclear is a category that covers a multitude of sins, and is worth further work for Compliance Managers / Officers and owner Managers.
If your file is sent to FOS, following a complaint, then for those marked unclear you can expect a fail at FOS, and you’ll be asked to pay compensation. In the same way, an FCA audit will categorise files as Suitable / Unclear / Suitable. Unclear is then, effectively, a fail, and we only give this categorisation as a way of providing you with a second chance – not with us, but within your own firm. On a lighter note, however, an adviser has often forgotten to upload a simple illustration, or other reference document, and that alone has triggered the fail. We can only check what we see, and the file checker is making a subjective judgement at a snap point in time. If a file does not explain exactly what the clients goals objectives were, what the adviser has recommended, and more importantly, how the recommendation meets the goals and objectives, the file will be as a minimum “unclear”.
IFAC will not usually check a file a second time, if we are asked to, this will be an exception and may incur additional costs. Primarily, it is up to you to sort out what we find and report. Essentially, you are judged on what you provide, and IFAC just measure and provide independent feedback at one point in time.
For Quarter 2, 2021, A majority of files (77.88%) are graded as a “Pass” with a grade of 5 or above, which is a slight decrease on Q1. The remainder have been graded mainly “Unclear” with further information, documentation or clarification required for File Excellence and Suitability.