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How to deliver compliant remote advice

In these times of social distancing and remote working, it is of course possible to continue to provide initial and ongoing advice in a compliant way.

How to deliver compliant remote advice

20 Apr 2020

Graeme Stewart

Many firms already give advice remotely, especially when carrying out client reviews and annual suitability assessments. This period has shown there's no reason not to use this approach with new clients as well.

You're likely to be fairly up to speed with remote working by now, but it's worth making sure that all advisers and the wider team are trained and comfortable in using your chosen video conferencing tools, whether it's Microsoft Teams, Zoom or similar.

The same goes for clients. There's a lot of good training material available online, and compliance and support firms can also help with this. 

Looking at the various stages of the advice process, here are some areas that are worth thinking about to make sure that advice given remotely is as compliant as your normal way of working. 

Disclosure

Disclosure must be made 'in good time'. This usually means very early on in the process of engaging with the client, and certainly before any advice is given.
 
This applies equally to clients receiving an ongoing service.
 
You may want to email disclosure documents ahead of remote meetings, along with your firm’s data protection statement and risk profile questionnaire.
 
Keep evidence that you've sent these documents, and ask the client to confirm by email that they have received them.
 
It's important to also note any verbal explanations given about the disclosure documents via a video call or over the phone, and that the client has every opportunity to ask any questions they have about them.
 
As with face-to-face meetings, you should agree with clients the services your firm will provide and the actual costs and charges the client will pay using a fee agreement.

This needs to be done before the client makes any payment. This process would fully meet the FCA’s requirement (COBS 6.1A.17R) that:
 
"Firms must disclose their charging structure to a retail client in writing, in good time before making the personal recommendation (or providing related services)."
 
It goes on to say that if you don't provide details of charges until the second meeting when delivering your recommendations then this could be a problem, as the client won't have had the opportunity to understand what they'll be paying early enough in the advice process.

Fact-find

Fact-finds ensure your firm meets the Know Your Client rules, and can be done remotely by phone or video call. 

You may decide to send the fact-find to the client for them to complete and return before a remote meeting is set up.
 
This can work well, but it does rely on you going through the client's answers carefully so that there are no misunderstandings, and so that any inconsistencies are addressed.

It's up to you whether you want to adopt this practice or not, but it does rely on the client's patience in completing the fact-find. 
 
In some cases, it may be easier to simply carry this out with the client instead, either on the phone or by video call.
 
There's no requirement to ask the client to sign the fact-find.

If this is your firm’s usual practice, you can either allow enough time for the fact-find to go through the post, or send the completed document to the client via encrypted email. 

You'll then need to get email confirmation back from the client that they're happy with the fact-find’s content.
 
Where you're using video conferencing to meet clients remotely, we recommend that you first establish with the client their preferred video platform, and then use this where possible.

The client is likely to be more comfortable with technology they already use. This may mean having to familiarise yourself with the platform first. 

Research and due diligence

Research and due diligence are much the same for remote advice as they would be for face-to-face.
 
As normal, you'll be selecting the appropriate products and providers or, in the case of ongoing advice, making sure the current advice remains suitable or providing new advice which is suitable.
 
Evidence needs to be kept of all the relevant products considered and discounted before the appropriate product or service is selected. 

Suitability report 

The suitability report should note how you've carried out the fact-find and any comments the client may have on this.
 
For new business, you may decide to send the client a copy of the suitability report well in advance of the follow-up presentation meeting. This allows the client time to read through the advice and prepare any questions.
 
There's no requirement for the client to sign the suitability report, but if that is your usual practice, again simply allow enough time for the report to be sent and the client’s signature returned through the post.

Presentation of advice 

Take the time to go through illustrations and key features documents as you would if sat in front of the client.
 
Extra time should be allowed for the client to digest the advice and other information provided, and to ask any questions.

This should be noted on the file to show the client has had time to understand the advice being given. 

Verifying identity 

Dealing with clients remotely increases the risks firms face around money laundering and financial crime.

You need to consider the risks separately for each client, taking into consideration who they are, what they're looking to do and how any transactions are to be funded.
 
If you meet a new client remotely, you should get at least one additional identity document than you would do if meeting face-to-face.
 
If hosting a video call, the FCA has said that in these current times there's no reason why documents can't be held up to the client’s laptop/desktop camera and the image recorded. These can then be emailed to the firm, preferably as PDFs.
 
Many firms use electronic identity verification which can make the process much easier.

Completion of paperwork 

You'll need to know if any paperwork requires a wet signature or an electronic one.

If a wet signature is needed then you'll need to use the post.

Many platforms, for example, have wet signatures integrated into its processes, though workarounds are being created with the use of scanned documents and a move to e-signatures. 
 
Whichever signature is needed, guide the client through the process - this includes informing the client of their cancellation rights and any follow-up paperwork that needs completing.
 
You can also use this opportunity to pencil in the next review meeting.
 
One last and important consideration is data security.

Always make sure when remote working to take extra care to protect client data and privacy.
 
Clearly, these are strange times. But hopefully the above gives you reassurance that life and business can still continue when dealing with clients remotely, whether for new or ongoing business.