Rory Percival: Client files must include ‘colour and detail’ to satisfy FCA

Advisers should add colour and detail to client files because the regulator wants to get a feel for the person behind the report, according to Rory Percival. Hannah Godfrey finds out more...

Advisers should add colour and detail to client files because the regulator wants to get a feel for the person behind the report, former Financial Conduct Authority (FCA) technical specialist-turned consultant Rory Percival has said.

Speaking at the Great Pension Debate II in Port Talbot, the ex-FCA man gave delegates a glimpse into the mind of the regulator.

He told the room the biggest single thing advisers need to do to improve their reports is adding more “colour and detail” about clients.

“The regulator is looking to be able to see a real person when they look at files, what they are trying to achieve, what their life is going to be like, and they want to be able to see that reflected in the fact find and in the suitability report,” he said. “Does the suitability report sound believable?”

Percival showed the room three defined benefit transfer case studies that each mentioned the client wanted to ‘take advantage of perceived high transfer values’. Percival said the repeated line did not feel believable.

“It doesn’t have the colour and detail about the client’s objectives and that is not replicated in the suitability report as well,” he said.

“The biggest single thing advisers need to do to improve their standards of files is to get more colour and detail about their client’s objectives and for that to be in the fact-finding stage and the suitability to report. More than anything else, that’s what you need to do.”

‘FCA can sense manipulation’

Elsewhere, Percival said the FCA is aware it’s “easy” for advisers to manipulate client objectives.

“For example, you say to a client, ‘do you want your pension to die with you?’ and they’ll say, ‘no I don’t.’ It’s one way of phrasing it that is manipulating the client’s objectives because you know they won’t want to do that.”

Percival said re-phrasing a question could better help to establish the “real priorities” of the client.

“They don’t know every pound you leave your children is a pound that you haven’t left yourself as part of your retirement plans, if you were to stress it to them that way, they would probably come up with a different answer,” he added.