When is ‘reasonably clear’ not clear?

Having just finished a large piece of work, which included an assessment of the clarity surrounding how and when fees are disclosed, I was surprised to read recently of an FOS decision in which they partially upheld a complaint regarding when fees were payable, despite stating in their decision: “I think the paperwork was reasonably clear…”.

It would appear that despite many unambiguous statements made in all of the documents given by the firm to the clients, a series of email exchanges within which the clients apparently expressed “surprise” led FOS to conclude that “...wires had been crossed”. The FOS subsequently ordered the firm in question to compensate accordingly.

Whilst I am sure the firm in question are disappointed with the decision, for us impartial observers, it does shed light on the mind set of regulatory decision makers.

For those of you that have commissioned RWA to undertake a ‘root and branch’ assessment of processes, systems, and controls (our Health Check), you will no doubt recollect our challenge to demonstrate that clients not only receive the necessary paperwork and documentation, but that you are able to adduce evidence that records them as having understood it.

The case I have referred to amplifies this: Yes, FOS has recognised the fact that the clients had a responsibility to read what they were about to commit to, however, it would appear that because the firm had not recognised early that there was a misunderstanding, FOS felt “it wouldn’t be fair and reasonable [for me] to uphold …the complaint in full.”

RWA has been consistent in our advice to clients that in most instances where there is a dispute, much will turn on individual circumstances, recollection, and understanding. 

RWA has always recommended that wherever possible, file/meeting notes are made at the time or shortly after a telephone conversation or meeting with customers, since these will be a contemporaneous record of what was seen, heard, or done by the maker of the note(s). This FOS decision reinforces our message.

For those of you with an iPhone, you may also want to consider using the FREE RWA ‘Our Meeting Recorder’ app, details of which can be found here: http://insight.rwabusiness.com/blog/posts/2017/may/insurance-broker-app-gets-an-update/

The moral of the story therefore is twofold: Firstly, don’t assume understanding simply from the [plethora] of paperwork you are obliged to issue; and secondly, where there is an expression of confusion, don’t ignore it and address it promptly if you want to avoid the burden of defending a complaint and the upset caused when decisions like these are made.

If you would like further information, please contact your RWA Business Manager, or email: helpdesk@rwagroup.co.uk.

 

Bruce Fayle LL.b(Hons), Dip.(Comp)
Audit and Conduct Risk Manager

About the author

Bruce has worked in financial services all of his life, including 11 years as a Compliance Director of a US owned Independent Financial Advisory & Wealth Management business. At RWA, Bruce leads the Audit and Conduct Risk department from our Manchester office and is RWA's lead consultant to the Guernsey Financial Services Commission (GFSC).

Bruce Fayle

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