Making Sense of Case

Review

Making Sense of Case Review Jan 2018

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Contents

Case Review ............................................................................................................................................ 3

Background ......................................................................................................................................... 3

Initial Case check ................................................................................................................................. 4

Pre-approval ............................................................................................................................................ 5

Service Levels .......................................................................................................................................... 7

Pre–approval submission process ........................................................................................................... 8

Criteria to sign off an adviser from pre–approval............................................................................. 10

Post-sale case review ............................................................................................................................ 10

Post sale process ............................................................................................................................... 11

Remedial Actions .............................................................................................................................. 13

Ongoing service reviews ....................................................................................................................... 14

Appeal process .................................................................................................................................. 15

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Case Review

Background

Case review at Sense Network is designed to be robust and meet the criteria laid down by the regulator. To protect you and your firm we check a significant number of cases which gives a number of benefits to you:

Competitive PII terms

Protection from Regulatory issues in the future

Robust files for future complaint defence

The case review process inevitably involves a combination of objective tests and subjective opinion. On the one hand, the existence of appropriate documentation, in the right chronological order and completed to sufficient standard is a clear requirement. On the other hand, when considering the actual advice provided, it is often the case that a number of solutions are available for a given set of circumstances, and that opinion varies as to which option carries the most merit.

Add this subjective aspect to the fact that a reviewer can miss or, misinterpret, a note on a client file and the conclusion is quickly drawn that a process of appeal is required to question a file review outcome.

Of course, the usual remedy for any difference of opinion is to pick up the phone and talk through the case with the T&C department. Only in situations where this does not resolve the issue should the case be referred to appeal.

The appeal process has not been designed to contest minor points. It has been established to provide recourse for an adviser when he/she feels that unfair remedial action has been required, or that fundamental points supporting the advice have been missed.

It is also important to note that appeals relating to missing documentation will not be accepted. Client records on Intelligent Office (iO) constitute the only permanent record of what advice was given and why, shortcomings in electronic file standards create significant risk.

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Initial Case check

Initially all advisers will be placed on 100% monitoring of regulated new business (either via pre or post sale checking).

This initial check is partly to ensure that they can demonstrate sufficient understanding and capability to use iO.

The adviser will continue to be monitored at 100% in each product area until he/she can demonstrate an acceptable standard of advice and documentation subject to the following:

Monitoring can only be reduced subject to a minimum of three post-sale products reviewed in each product area (this can be increased depending on previous experience and GAP assessment or issues raised during authorisation process)

Once the number of cases appropriate to each product area has been reviewed the adviser will be moved to risk based case checking level appropriate to his/her RAG rating.

For example:

If 2/3rds or more of the initial cases are graded Green then adviser will be graded Green in that product area

If 2/3rds or more of initial cases are graded Amber then adviser will be graded Amber in that product area

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Pre-approval

Pre–approval case check is required for all specialist permission areas. Sense Network’s additional specialist areas and authorisation requirements are as follows:

Specialist

authorisation

Products included Authorisation minimum

requirements (examples)

Lifetime Specialist Equity Release Home reversion

Mortgage authorisation plus CF7 & HR1 or ER1

Long Term Care Specialist

Long Term Care DI authorisation plus CF8

Retirement options Specialist

Capped Drawdown Phased Drawdown Flexi Access Drawdown Third Way Annuities All other Pension Annuities

DI authorisation plus K10 & K20 (or J05) or G60 (plus previous KPIs) or Valid SPS certificate

Pension Switch Specialist

Switches from occupational arrangements with no safeguarded benefits/ Switches from personal arrangements with underlying guarantees, e.g. GAR Advising on transferring benefits from an overseas pension (QNUPS / QROPS) back to the UK

DI authorisation plus Valid SPS certificate

Pension Transfer Specialist

Transfers from Final Salary schemes and occupational arrangements including safeguarded benefits, regardless of when the benefits are being crystallised.

DI authorisation plus G60 or AF3

Pensions Specialist Setting up: Final Salary schemes CIMP/COMP S32 (all types) SSAS EPP

DI authorisation plus J04 or G60 / AF3 or Valid SPS certificate

Investments Specialist

Commercial Property Purchase Scheme Geared investments Investment trust Structured plan (Non FSCS) Traded Endowment plan BPR scheme Innovative Finance ISA (IF-ISA) Peer to Peer Loan

DI authorisation plus G10, J01, AF1, R02 or Valid SPS certificate

Tax investments Specialist

BES EIS EIZT Film partnerships VCT

DI authorisation G10, J01, R03, AF1 or Valid SPS certificate

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As well as the above specialist authorisation areas pre–approval case check is also required for a number of other advice areas as follows:

Advice Area Description

Investment Bond Replacements where penalties exist

All Investment Bond Replacements where penalties exist

on the existing contract (e.g. MVA)

Investment cases for over 80’s All non-tax efficient investments (e.g.

Bond/OEIC/CIA/GIA) for clients aged over 80.

ISA Replacements All ISA Replacements not reinvested in an ISA

UCIS / NMPI funds Any product including the use of UCIS / NMPI funds (This

includes subsequent switches to UCIS investments)

MetLife Guaranteed Products All MetLife Guaranteed products

At Retirement planning

All products where a crystallisation event is to take place using any pension funds including advice for

Capped Drawdown

Phased Drawdown

Flexi Access Drawdown

UFPLS: series of withdrawals

UFPLS: withdrawal of entire fund

Third Way Annuities

All other Pension Annuities

Existing Income drawdown contracts

Subsequent income withdrawals which are NOT in line

with the initial recommendation to crystallise pension

funds, specifically where the action results in additional

income being taken or income being withdrawn sooner

than originally recommended

Pension Replacements with previous transfer within 5 years

Any pension transfer where a previous transfer of the

same funds has been done by the same firm or adviser

within the preceding 5 years

Pension Replacements where

penalties exist

All Pension Replacements where guarantees exist (e.g.

GAR) or where penalties exist on the existing contract

(e.g. MVA)

Pension Divorce cases Splitting and reinvestment of moneys directly from

pensions as instructed as part of settlement

SIPP / SSAS property purchase Commercial property purchase within a SIPP/ SSAS

Critical Illness replacements Contracts involving replacement or loss of Critical Illness

Aviva Relevant Life plan Use of the Aviva Relevant Life plan including Critical Illness cover

Please note that these advice area pre-approval cases will not be gated on the iO system therefore pre-approval process will have to be followed manually i.e. you must select a ‘Pre-approval’ advice type when adding the plan.

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This list is not exhaustive and may be added to over time if experience indicates it appropriate. Equally if an area is found to be unnecessary in the future it may be removed.

The standard charge for a pre-approval review is £75.

For DB Pension transfers the charge for a pre-approval review is £250.

Service Levels

The timescales that the Case Review team work to are as follows:

New Case Timescale for case check Example

Pre-approval 5 working days Email notification received on Wednesday 1st, feedback to adviser by Wednesday 8th Email notifications received over the weekend or after

4pm are marked as received the next working day

Post Sale 10 working days Plan status changed to Submitted to Provider (STP) on Wednesday 1st, feedback to adviser by Thursday 16th

Resubmission/Response Timescale for review of response

Example

Pre-approval 5 working days1 Email response received on Wednesday 15th, feedback to adviser by Wednesday 22nd Email responses received over the weekend or after

4pm are marked as received the next working day

Post Sale 10 working days Email response received on Wednesday 15th, feedback to adviser by Wednesday 29th

1 Wherever possible we will endeavour to deal with pre-approval responses within the 5 day maximum

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Pre–approval submission process

Cases requiring pre-approval must be submitted for checking before any recommendations are presented to the client

The pre-approval submission process is as follows:

Adviser completes sales process up to and including fact finding

Adviser/Administrator inputs client and plan as a draft (selecting Pre-approval advice type) on iO and uploads the following documentation:

Research

Key Facts Illustration (KFI)

Key Features Document (KFD)

Draft Suitability report

Any other document(s) relevant to your advice

The iO system has a number of new business tasks which are split between pre-

approval submission and post sign off activities. Tasks requiring completion

before transition from Draft status to Compliance Sign off are:

Research & KFI - uploaded

Fact find/ ATR/supplementary info/K&E/RCF uploaded

KFD - uploaded

Suitability Report uploaded

Once all the documentation and draft Suitability report is on the iO system and the relevant tasks completed, the plan status should be changed to ‘Compliance sign off’.

An email notification to case.review@sense-network.co.uk should be sent to inform case checking that the file is ready to be looked at and quoting the plan IOB reference number.

For DB Transfer cases, please ensure that this is clearly stated within your covering email.

We will check the case and provide feedback to the adviser within five working days of notification, grading as follows:

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RAG grade Definition

Green* ‘Compliant file’ with no issues

Green ‘Compliant file’, but some minor compliance procedural/admin issues

Amber ‘Compliance failings identified’, which may affect the overall

suitability of the advice given

Red ‘Non-compliant file’ with serious compliance failings, which

potentially give rise to a cause for concern regarding the suitability of

the advice. The adviser may amend the recommendation and

resubmit the case for pre-approval. However, the process will start

again.

Any remedial actions noted in the feedback should be completed and confirmation sent by email to case.review@sense-network.co.uk confirming that the revised documentation is available for review.

This will be reviewed and we will confirm when the proposed recommendation has been approved.

Please note that recommendations should not be made nor applications submitted prior to receipt of approval.

All pre-approval cases graded Green (including those with minor remedial points) can proceed to submission to provider. Naturally, the requirement to complete the outstanding remedial within 30 days of receipt still stands.

Once approval is given if any changes are made the adviser should contact case.review@sense-network.co.uk to agree these are acceptable.

We will then confirm that the case has been signed off.

On sign off we will change the plan status to Submitted to provider. If the client does not accept your recommendation you should change the status of the plan to NTU.

Where a case is not approved to proceed, the plan should be marked as NTU, no plans that have undergone the pre-approval process should be deleted.

The final step is to make sure your file is complete, and all documents uploaded, once the advice has been presented and accepted. The remaining new business tasks should now be completed to confirm this and enable the transition from Submitted to Provider to In Force status, these are:

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Service Proposition / IDD &ToB uploaded

Fee Agreement - signed & uploaded

VOI - form & evidence uploaded

Proposal/Application uploaded

Initial & ongoing fee(s)/commissions created

Other documents uploaded e.g. Trust docs / POA

Criteria to sign off an adviser from pre–approval

The Compliance Director, at his sole discretion, may agree that an adviser is of sufficient experience to be moved to a lower percentage of pre-approval cases or to move to post sale checking however as an indication consideration will include the following:

The Adviser must be consistently having cases graded as Green

The Adviser must be demonstrably active in that area

The Adviser must have adequate CPD in place to demonstrate that knowledge is being maintained

Overall risk grading of Green

Post-sale case review

Advisers are graded using RAG risk rating.

When they are moved from initial check to risk based checking the level of checking will be based on the RAG rating of the initial cases as mentioned in the Initial Case Check section on page 4.

Adviser RAG ratings are calculated using Case Review statistics (% graded Red and

Amber and amount of outstanding remedial) however this can be increased based on a

number of other areas as detailed in the T&C scheme.

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Post sale process

The submission process is as follows:

Adviser completes full sales process

Once all the documentation and suitability report is on the iO system the adviser/administrator can complete the 10 new business tasks and change the plan status to ‘submitted to provider’.

Case Review team carry out case selection on a daily basis based on submitted business on iO so no more adviser interaction is required.

We will check the case and provide feedback to the adviser within 10 working days of notification, grading as follows:

RAG grade Definition

Green* ‘Compliant file’ with no issues

Green ‘Compliant file’, but some minor compliance procedural/admin issues

Amber ‘Compliance failings identified’, which may affect the overall

suitability of the advice given

Red ‘Non-compliant file’ with serious compliance failings, which

potentially give rise to a cause for concern regarding the suitability of

the advice.

Any remedial actions noted in the feedback should be completed and confirmation sent by email to us that the revised documentation is available for review.

This will be reviewed and we will confirm when the proposed remedial is sufficient and if the case has been closed as completed.

Please note that should remedial action be insufficient to resolve the issues we will need to assess if the client has been disadvantaged and either undo the transaction or appropriately compensate the client to put them back in the position they would have been had the transaction not taken place.

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Cases are selected based on the following:

Product Adviser Red Adviser Amber Adviser Green

Ongoing Ongoing

GI

Term Assurance 100% post sale 1 in 10 1 in 20

Whole of Life 100% post sale 1 in 5 1 in 10

PHI 100% post sale 1 in 10 1 in 20

Critical Illness 100% post sale 1 in 5 1 in 10

Mortgage

Residential, Buy to

Let and Let to Buy.

100% post sale 1 in 10 1 in 20

Retirement Planning

SIPP 100% post sale 1 in 5 1 in 10

Personal Pension 100% post sale 1 in 5 1 in 10

Stakeholder 100% post sale 1 in 10 1 in 20

Investment

Investment Bond 100% post sale 1 in 5 1 in 10

ISA 100% post sale 1 in 10 1 in 20

Unit/Investment

Trust

100% post sale 1 in 5 1 in 10

Please note that the table above is for illustrative purposes only as the selection is

actually automated via iO. As such the system will select based on the above but due to

multi-proposal cases the actual percentage checked may be slightly different.

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Remedial Actions

The process for remedial actions is as follows:

Case review team issue file feedback

Advisers have 60 days to complete the outstanding remedial to enable the file to be closed. During this time support will be available from the case review team and T&C

If the outstanding remedial is not complete and the file not closed within 60 days, the adviser will be placed on 100% pre-approval for all business for the next 30 days. This will ensure that no further post sale remedial is created so that the adviser can concentrate on the overdue post-sale cases. During this period you will be allocated a T&C Supervisor who will focus on your overdue remedial

If the outstanding remedial is not complete after a total of 90 days, the adviser will be suspended from writing new business. The adviser will be re-instated once the overdue outstanding remedial is completed. Please note that you must view this as a last resort action as this suspension is effectively a change in competency and as such we will have to notify the FCA of the suspension which will result in a black mark on your permanent record. As such it would be unwise for any adviser to get to this point as it could have a negative long term impact on their career

Important Points:

The standard turnaround service standard for post-sale remedial checking is 10 working days. Therefore you must ensure that all remedial is completed and submitted to case review at least 10 working days before the deadline

A case will only be closed once the completed remedial has reached the required standard

The workflow of the case review team and T&C will be managed to ensure that advisers with overdue outstanding remedial are supported and the focus will be on returning their status back to normal as soon as possible

Please note that if an adviser is put on 100% pre-approval the standard £75 charge applies

You will appreciate that while these rules are extremely stringent this is essential in order to demonstrate to the FCA that we take our responsibilities seriously.

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Ongoing service reviews

Sense undertakes sample-based checks of records on iO to ensure that:

1. There is evidence that periodic reviews are undertaken, consistent with the service level chosen by the client

2. Reviews are in line with the standard and scope indicated in your firm’s Client Service Proposition

3. Clients receive good outcomes from the reviews

The audit team will carry out a review of ongoing client service reviews as part of the network’s audit process. When a sample of service review cases has been checked we will provide feedback to the adviser and AR Principal with notification of grading as follows:

RAG grade Definition

Green ‘Compliant Service Review file’ – suitable review activity & supporting

documentation

Amber ‘Service Review Compliance failings identified’ - some evidence of

reviews on file but insufficient in either quality or availability of

documentation to confirm standard and scope of service agreed

Red ‘Non-Compliant Service Review file’ - no evidence of reviews taking

place

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Appeal process

All appeals must be agreed with an AR Principal and a notice of appeal must be sent directly by them, not the adviser.

This notice must be received in writing, addressed to the Compliance Director, within 10 working days of receipt of the findings of the relevant case review.

If the Compliance Director receives no notice of appeal within 10 working days, the right to appeal is deemed waived and that the Adviser accepts the findings of the case review.

The Compliance Director will acknowledge receipt of the notice of appeal as soon as possible.

The adviser must then submit details, in writing, of why they believe the outcome of the case review to be incorrect or flawed. This should be sent to the Compliance Director, within 10 working days of the AR principal sending the notice of appeal.

The Compliance Director and Head of Compliance (or suitably qualified delegates) will consider all appeals in a meeting held once a month.

A written response of the appeal outcome, reasons for the outcome and the evidence presented to the appeal will be sent to the Adviser.

If the appeal is upheld this can result in a combination of possible outcomes:

RAG grading adjustment

Remedial actions removed

Remedial actions amended

New or additional remedial actions

The written appeal response will make clear which of the above will apply.

The outcome of this appeal process will be final.