£193 billion: the real cost of poor recordkeeping

The wealth management industry was rocked when the FCA published its thematic review into the suitability of investment portfolios. 60% of investment portfolios reviewed by the regulator were found to have a high risk of unsuitability or were unclear.

Two of the key failings were inadequate record keeping and inadequate governance and monitoring arrangements. Without either of these, firms are unable to fully evidence suitability and therefore cannot fulfil their regulatory obligations.

Record keeping is a small but vital part of any financial services business, and the review demonstrates the potential pitfalls of not getting it right. The thematic review found that 23% of files had a high chance of unsuitability and 37% were deemed unclear.

Looking more closely at those numbers, the wealth management industry contributes approximately £5.5 billion a year to the UK economy, about the same as a city the size of Brighton and Hove, and handles about £524 billion pounds worth of client assets.

Based on the FCA’s findings, an estimated £120bn needs to be redressed and £193bn may need to be redressed purely because of inadequate record keeping.

Protect your customers

Reviewing potentially unsuitable cases is time consuming, expensive and stressful for staff. We believe the only way to strengthen record keeping is by recording every interaction between customers and staff members, including over the phone, via video conferencing or face to face.

By capturing every conversation, firms can reduce instances of unclear files. As the Recordsure system analyses more conversations, it can flag instances of non-compliance and reduce the likelihood of unsuitability.

The FCA is focusing on wealth management firms, so firms should be proactive and protect clients. Our Recordsure solution can reduce compliance costs.