The importance of maintaining thorough client file notes was pressed home to advisers during CommInsure’s recently-completed national roadshow events.
Presented as a mock trial conducted by the Financial Ombudsman Service (FOS), and echoing real life cases, advisers learned how they can provide solutions as agreed with their clients, but can still emerge on the wrong side of decisions because they are unable to prove what conversations had taken place with their clients.
In one of the mock trial disputes, the client complained he had requested a comprehensive cover solution and said he had no other income source at the time. However, the adviser contended the client had only requested basic cover and that he did have other sources of income.
Because the adviser had insufficient file notes to disprove the client’s claim, the dispute came down to the adviser’s word against his client. So, while the adviser may well have been correct, his lack of thoroughness or ambiguous file records saw FOS find in favour of the client.
The adviser was ordered to pay hundreds of thousands of dollars in compensation, reflecting the inadequate benefit the client received after claiming on his policy.
Christina Kalantzis, author of the mock trial presentation and head of Alexis Compliance Solutions, says the number of complaints lodged with FOS has increased in recent times by 77%, mostly due to three main causes:
- Inappropriate advice
- Lack of service
- Delays in providing service
The message and its implicit warning to advisers is clear – keep poor file notes at your peril!
Advisers attending CommInsure’s roadshow were provided with a summary document from Ms Kalantzis, which outlined decision trees, checklists and processes that would assist advisers develop systems that would create, maintain and update thorough client file notes in order to minimise the chances of ever having to appear before FOS to justify their actions.
