This is an edited version of tips the Financial Ombudsman Service gives to planners. It’s interesting for consumers to know the advice given to planners:
- Take detailed file notes.
The Financial Ombudsman Service (FOS) relies on evidence provided by the parties to a dispute. Documents created at the same time as the activity or advice in question are usually given more weight than later recollections of what was said or done. This means contemporaneous file notes of conversations and actions are solid gold when a dispute comes to us.
- Use a client's own words
We do not consider client objectives and instructions written in industry terms that few clients would understand to be a reliable record. Write down a client’s objectives in the words the client has used in answering your questions about their objectives and how to quantify those objectives.
- Turn clients away when appropriate
If your services are not suited to a particular client (eg they are seeking advice about direct shares and you don't provide that service), you must tell them so and send them away. Don't try to shape the client to your offering. If a client is seeking a return which does not match their risk profile and you can’t convince them to change their expectations, either send them away or see tip 4.
- Explain risks to clients who choose to act against your advice
You must be very clear in explaining the risks and documenting that the course of action is against your advice. Explain the risks in language the client understands make a contemporaneous file note and have the client sign it.
- Explain what types of service you are providing
Clients don't know the difference between information, general advice, personal advice and execution-only services. If you don't give the appropriate explanations and warnings or you are unclear, then you could be found liable for advice or activities that you had not intended to provide.
- Understand and explain the products
Understand any products you are recommending. Don’t advise on products you don't understand. Don't just hand over a Product Disclosure Statement (PDS) – you must explain the PDS to your client and record your discussion in the Statement of Advice (SOA).
- Be clear about the advice relationship with clients you know
If you are giving advice to a friend, relative, colleague or employee, it is critical to formalise and document the process as you would for any other client. In addition; declare any conflicts of interest as you would for any other client.
For more tips, check out the full list here.