Deloitte Recommends Reviewing Past Advice, Sales Practices

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This article appears courtesy of Institutional Investor.
Source: Compliance Reporter


U.K. firms should review their advice and sales practices over the last several years as part of their response to the Financial Services Authority's customer fairness initiative, advised Michael Corrigan, partner at Deloitte & Touche in London. Firms should specifically look for any problems that might lead to customer complaints, Corrigan told a Securities & Investment Institute compliance forum Oct. 20 in London. "The question you should ask is 'how toxic is my back-book,'" said Corrigan. "Have you got structured products sold five years ago that are going to come back and bite you?" For example, if a firm finds it may have sold an investment to unsuitable customers it should consider warning those customers, offering them an alternative investment or creating claims handling procedures to deal with likely future complaints, he noted.

Reviewing previous sales practices will demonstrate to the FSA that the firm is trying to act in the best interests of customers, which is a key element of the FSA's treating customers fairly (TCF) initiative, said Corrigan. "How confident are you that pensions advice you gave five years ago was accurate?" he asked. TCF, which was prompted by a string of U.K. scandals, encourages firms to look beyond minimum rules and put customers first. Firms that identify and attempt to fix problems themselves are also less likely to face enforcement than if the problem was identified by the regulator, he noted.