The wealth management industry was rocked late last year when the FCA published its thematic review into the suitability of investment portfolios. Shockingly, 60% of investment portfolios reviewed by the regulator were found to have 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 in place firms are unable to fully evidence suitability and therefore cannot fulfil their regulatory obligations.
Record keeping is such a small but vital part of any financial services business and this perfectly 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.
Now let’s delve a little deeper into 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.
So, based on the FCA’s findings, that’s an estimated:
£120bn that needs to be redressed and;
£193bn that may need to be redressed purely because of inadequate record keeping.
Protect your customers
We all know that reviewing potentially unsuitable cases is time consuming, expensive and extremely stressful for your staff and that’s why we at Recordsure really believe that the only way to bulletproof your record keeping is by recording every interaction between your customers and staff members. That includes over the phone, via video conferencing or face to face. By capturing every conversation, you can eliminate instances of unclear files.
What’s more, as the Recordsure system analyses more of your conversations, it will be able to flag instances of non-compliance, dramatically reducing the likelihood of unsuitability.
The FCA is currently focusing on wealth management firms, so why not be proactive and protect your clients today?
Our Recordsure solution can reduce your compliance costs. Find out how https://recordsure.com/solutions/