FCA File Checks and Reviews: A Critical Part of Compliance for Directly Authorised Firms in Islington

Lee Werrell

Posting for 3+ years

Islington

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FCA File Checks and Reviews: A Critical Part of Compliance for Directly Authorised Firms in Islington

Lee Werrell

Posting for 3+ years

Islington

The Financial Conduct Authority (FCA) is the UK's financial services regulator. It is responsible for ensuring that financial services firms comply with the law and treat their customers fairly. One of the ways the FCA does this is by requiring firms to have robust systems and controls in place. This includes having procedures for checking and reviewing files.

File Checks

File checks are a way of ensuring that firms are following their own procedures and that they are providing customers with the right advice. They involve checking files to make sure that they are complete, accurate, and that they meet the FCA's requirements.

File Reviews

File reviews are a more in-depth look at files. They involve checking files to make sure that the advice given to customers is suitable and that the firm has taken all of the necessary steps to protect customers.

Why are File Checks and Reviews Important?

File checks and reviews are important for a number of reasons. They can help to:

Detect and prevent financial crime
Protect customers from unsuitable advice
Ensure that firms are following their own procedures
Improve the quality of advice given to customers
Reduce the risk of regulatory fines
How Often Should Firms Check and Review Files?

The FCA does not specify how often firms should check and review files. However, it does recommend that firms have a system in place for doing so on a regular basis. The frequency of checks and reviews will depend on a number of factors, such as the size of the firm, the complexity of the products and services it offers, and the level of risk it faces.

What are the Potential Consequences of Failing to Check and Review Files?

If a firm fails to check and review files, it could face a number of consequences, including:

Regulatory fines
Damage to its reputation
Loss of customers
Legal action from customers

Conclusion
File checks and reviews are an important part of compliance for directly authorised firms. By checking and reviewing files on a regular basis, firms can help to protect customers, improve the quality of advice, and reduce the risk of regulatory fines.

Outcomes focused
Outcomes focused file reviews really get to the heart of whether the case is suitable and whether the client has been adequately informed. They go beyond just the risk question to assess whether the solution meets the client's objectives, tax position and examines whether it is suitable from a cost perspective along with other areas. This approach is the one that is most aligned with the FCA's focus on outcomes.

Which form of file review is undertaken in your firm? If you don't undertake outcomes-focused file reviews, or want to learn more about how these should be undertaken, then contact us today! Read more