Feedback from advisers who have used technology-based suitability reporting software has typically shown a 75% increase in efficiency, with a manual report normally taking an hour (60 mins) compared to only 15 minutes using a technology supported process. Based on a typical firm producing 50 suitability reports every week, this amounts to a total time saving of over 37 hours every week.
Although the majority of firms have seen little impact from the new regulations in this area, 8% of advisers believe the FSA’s ‘relaxation’ of suitability reporting has actually made the process more complex, due to the number of report variations now available. These are some of the key findings of the new 1st – The Exchange suitability reporting poll, completed by over 260 advisers last week.
In November 2007, the FSA published its Conduct of Business Sourcebook (COBS) introducing a ‘simplification in suitability reporting’, to give advisers more control over the actual content of client suitability reports.
Shortly after this FSA update, 1st launched its e-Suitability service. Almost 300 advisers have already subscribed to the service with paragraph library content and are using it to electronically produce client suitability reports as part of their standard business process. There are a further 1500 users in larger, enterprise organisations who have taken the service.
David Child, managing director of 1st - The Exchange, comments:
“Given the healthy appetite we have seen for our own e-Suitability service since launch, it is a little surprising that so many adviser firms are still relying on manual methods of producing reports. Research and feedback from firms who have switched to using e-services shows a marked increase in efficiency and cost-reduction, not to mention improved client service levels. As regulations continue to tighten, no doubt some of these firms will realise they have to increase technology within their business processes if they are to remain competitive.”
There is now a choice of two paragraph providers, with a second provider; Avail Ltd, also providing standard paragraphs from 1st July.
Avail Ltd – This paragraph provider covers a broad range of products across mortgages, insurance and investment paragraphs. The Avail paragraph library is now in its 10th year and provides a wide range of bespoke paragraphs, written by professional advisers and designed to meet the requirements of COB, ICOB and MCOB regulation and products. It covers different advice types ranging from personal to business advice, full and limited advice scenarios.
Bluegrove Technical Services Ltd – IFA practice specialising in investment and estate planning advice. Paragraphs cover a wide range of advice areas including mortgages, equity release, protection, pensions, wraps, risk profiling and trusts.
Joe Hill, director of Avail, comments:
“I have seen suitability letters for simple products – such as term assurance – in excess of 12 pages long, effectively just recycling the information the client has already received which is clearly not in the spirit of Treating Customers Fairly. It is far better to explain in simple terms how an adviser’s recommendation satisfies the client’s objectives and this is where e-Suitability paragraphs really help – providing simple solutions to complex problems.”
Key Adviser Benefits of e-Suitability:
- Significantly reduces the time spent on producing suitability letters/reports
- Significantly reduces the amount of time required to support compliance queries
- Improves sales and marketing effectiveness through the ability to add personalised information and company logos directly to the suitability letter/report
Compliance Benefits:
- Quality of documentation is improved at point-of-sale leading to increased first time pass rate
- Reduces checking effort by use of colour-coded data within the report
- Versioning of the letters enables easy checking of historical cases providing a full audit trail
- Ensures a consistent, professional approach through the production of personalised, clearly understandable suitability letters/reports
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