Compliance News 08/21 (Q2 2021 CPD)

This is just to let you know that we will no longer be re-setting your CPD each quarter.  This means you can continue to record your CPD and your hours will add on to those already recorded in the first quarter.

Our reason for doing this is because many of you are recording rather extensive notes from lender meetings, etc, and we believe you will be referring back to these notes in the future.  We will therefore leave your CPD on the system for a full year.

The rules are unchanged so in Q2, and subsequent quarters, we still expect you to add on a further 4 hours of mortgage CPD (minimum) plus at least 4 hours of protection CPD too.

Please be aware that as per our Compliance News issued on 22nd October 2020, if you have not recorded sufficient insurance CPD then this is a regulatory breach that will need to be recorded with the FCA.  Furthermore, you will be unable to advise until the minimum levels of CPD have been recorded and validated.

Compliance News 07/21 (Record Keeping RWL updates)

Background.
 
There are a few areas where we are making changes to the Reasons Why Letter wordings, to help make it easier to record aspects of your advice.

1. Objectives section of the Mortgage RWL.

Sometimes the mortgage case is straight forward and so the current Objectives section works well.  However, just as often we see this section of the RWL being used to give quite a bit of background information concerning the client’s circumstances.  Therefore, moving forwards we will amend the heading of this section to “Background & Objectives” and we will also provide a prompt for you to add in any background information to the client’s objectives.  We feel this will help make your letters more personalised and on the odd occasion where you don’t feel that any background information needs adding in, you can simply delete “Background and” from the section heading of your RWL.

2. Children’s Critical Illness Cover in the Protection RWL.

Currently, there is a prompt for this to be included when you recommend CIC to the applicants and it is a costed extra.  However, as some providers now provide Children’s CIC with life cover or income protection, then the Children’s CIC paragraph will be added to these products within the Protection RWL too.

3. Increasing Life Cover in the Protection RWL.

These paragraph options are currently only included on family protection products selected, however, we will now include them on the mortgage protection products too, to help you record your advice where you recommend increasing cover to protect the equity loan element of a Help To Buy mortgage, for instance.

4. Trusts in the Protection RWL.

Whilst we feel that the current trust wording works fine, we will still add in a new optional paragraph where you recommend the Royal London “beneficiary nomination” or the Guardian “pay-out planner” which are alternatives to putting a single life policy into trust.  As a reminder though, whilst these features are quick and easy to use, and do provide a quick pay-out to the nominated beneficiaries, they do not take the policy benefits outside of the individual’s estate for inheritance tax purposes.  If you are in any doubt about creating an IHT liability, then simply recommend a trust, but where you are comfortable arranging either of these options instead then you will now have a new paragraph to select.

When will these changes be effected?

You should notice these subtle changes within the next few days.  If you have any queries, please let Richard Hamley or your Sales Manager know.

Thank you.

Pete Burgess

Compliance News 06/21 (A breach of procedures)

This communication concerns protection record keeping and is a direct result of some recent checking which is likely to cause us a problem with our PI insurers.

What is the issue?

All areas of protection indicated in the fact-find that the client(s) wished to discuss MUST be followed up with a recommendation, and the outcome of recommendations MUST be replayed back to the client(s) in the PRWL.

We are seeing too many cases where this isn’t happening and only the eventual sale recorded in the PRWL.

Potential scenario. 

Client(s) indicate they wish to discuss CIC, Life Insurance and B&C cover. The eventual sale is DTA and B&C and there is no mention of CIC in the PRWL. The client goes on to suffer a critical illnessat some point, remembers having a conversation on CIC and looks at his policies. A solicitor gets involved and investigates the protection sale. The fact-find clearly states the client wanted to look at CIC but there is nothing to follow that. Without a doubt, a complaint would follow, and we may not be covered by our PI insurers to assist with any compensation payment.

Going forward, failure to comply with the opening paragraph will mean a breach will be recorded.

If you have any queries, or if you require help in ensuring your protection sales are recorded correctly, please let Richard Hamley or your Sales Manager know.

Compliance News 05/21 (Guardian life cover)

This communication follows a recent update to the paragraphs concerning Guardian products in the Protection RWL.  The previous communication was from Pete Burgess, email dated 22nd December 2020.

When recommending Guardian because they are cheapest.

We recently made some changes to the wording in the Protection RWL to reflect the fact that some joint clients are specifically choosing to take out Guardian life cover because it offers them double cover, despite not being the cheapest product available for them.  However, there are also occasions where Guardian life cover comes out cheapest, or the client is not concerned about double cover. 

The changes we made to the RWL paragraphs mean the wording is no longer available from the template to cover this scenario, so where you are recommending Guardian for joint lives when it is cheapest you need to use the following wording.  (Please note this wording applies for Life Cover only, and not Critical Illness Cover).

Suggested new wording.

The product provider recommended is Guardian because they offer the most competitive premium.

Your Guardian product will be set up as two separate single life policies under a master policy owned by you both.

Compliance News 04/21 (Learning from Re-certification Workshops)

Background.
 
Thank you all for completing the tests which followed each of the 4 compliance workshops which we ran towards the end of 2020.  The following statements relate to the knowledge we tested, which you can refresh by reading these statements.

TEST ONE.

Sales Process – If you don’t meet with a new client and so cannot see their original ID, then you must ask Lynn or Pete for an Equifax AML (anti money laundering) check to be done.

Sales Process – There are customer benefits in conducting your telephone appointments over more shorter calls, rather than one or two lengthy calls, to keep their attention and to help their understanding.

Sales Process – It is mandatory to provide the client with The Right Advice brochure when they are first time buyers.  Although it can also be provided to any of your clients.

Sales Process – You must always obtain a CI Expert report when you are recommending that a client existing CIC policy is to be cancelled or replaced.

Sales Process – The minimum requirements to evidence income and affordability for an employed applicant are three months payslips plus the corresponding three months bank statements.

Sales Process – And the minimum requirements for self-employed are either the last two years accounts or last two years SA302s.

Sales Process – Some common examples of staged income ‘could be’ where an applicant works in the family business, or an applicant who has had a large recent pay rise, or an applicant with multiple jobs, or an applicant who has just changed their employed job which now pays significantly more than their previous employed job or self-employment.

Sales Process – Before deciding to take leads from a new lead source/provider, you must first tell Pete Burgess so we can undertake some due diligence.

Sales Process – If you have any concerns regarding an applicant or their paperwork, you must report a Suspicious Activity Referral to Pete Burgess (this can be the specific SAR form on the Knowledge Hub, or an email or phone call – anyhow will do!).

TEST TWO.

Mortgages – We have access to over 100 lenders.

Mortgages – The new HTB scheme came into effect on 16th December, for completions from 1st April 2021.

Mortgages – We are responsible for the advice when we use a packager to help place a case.

Mortgages – We are not responsible for the advice when we make a 2nd charge referral to CSC Loans. The advice for 2nd charges sits with CSC Loans.

Mortgages – The current reduced rates on Stamp Duty Land Tax end on 31st March 2021.

Mortgages – For Later Life advice, we feel Equity Release qualified Advisers are often better placed to help the client.  Also, if you recommend a product which is both interest only and beyond an individual’s intended retirement age, then your advice must be checked.

Protection – We do not have a preferred provider for Income Protection.

Protection – The Vitality product where the guaranteed premiums cannot increase is Essentials.

Protection – You should recommend Vitality’s Serious Illness Cover over a traditional Critical Illness Cover policy, only when the client wants more illnesses covered than from a CIC policy.

Protection – Examples of “value added benefits” on a protection policy are the likes of Global Treatment from Aviva; Fracture Cover from Vitality, Aviva or Zurich; Best Doctors and GP24 from various insurers.

Protection – All single life Term Assurance and Critical Illness policies should be written in Trust, but it is not necessary to do so for joint life policies.

Protection – You can only make use of a “nomination of beneficiaries”, instead of a Trust, on a Life policy (Guardian and Royal London) where you are sure there is no IHT liability on the applicant’s estate.

TEST THREE

Complaints – The excess level provided by our PI cover is £2,500.

Complaints – To improve the chances of a complaint being defended in the future, add lots of Notes to The Key to provide soft facts to help justify your advice.

Complaints – If you receive a complaint, don’t try to deal with it yourself, don’t admit liability, do pass it to Pete immediately, do provide a report when asked.

Breaches – Our most common type of breach is for Record Keeping, so things such as the RWL not being done within the required 10 days, or supporting documents not added to The Key.

SARs – Our most common type of SAR is for Staged Income, and “possible examples” of staged income are working for a family business, a large recent pay rise, individuals with two or more jobs.

Conduct Rules – There are 5 First Tier Conduct Rules for Advisers to follow.

Certification Regime – The types of evidence needed to demonstrate your competence to the FCA are fitness and properness checks, evidence of the minimum required hours of CPD being attained, an analysis of your product sales to demonstrate the right customer outcomes are achieved and details of any breaches and complaints, etc.

CPD – We now require an Adviser to complete at least 4 hours a quarter of CPD in each of your licence areas, so if you advise on mortgages and protection, that is 4 hours of each.

TEST FOUR

Mortgages – When sourcing a mortgage using ‘Total to Pay’ and the client wants to add the fee to the mortgage, you should only add the fee when creating the ESIS from your sourcing results (and not earlier in the sourcing process).

Mortgages – With a product transfer you can proceed with reduced supporting documents when dealing with an existing client and nothing in their circumstances has changed.  Please add a note to The Key to confirm these points.

Mortgages – Where your client is being gifted their deposit, you need to obtain a gifted deposit letter plus a bank statement or other evidence confirming where the funds are being held.

Mortgages – If you are arranging a mortgage for a client and it runs beyond the anticipated retirement age then you need to record how the client would afford it from retirement income.

Mortgages – Where you have arranged a mortgage for your client, and at the time you agreed with them to review protection when the offer was issued, but the client will not return your calls or emails about reviewing protection, then you should issue the “no protection letter 2” (can be found in The Key) and also keep trying to contact the client to review protection.

Protection – If you are recommending income protection for your client this should be written to the client’s anticipated retirement age.

Protection – If are making a family protection recommendation, and your client tells you they want to take out lump sum cover, we would expect you to recommend Family Income Benefit which the client partially accepts and then takes out lump sum cover. Please provide a reason why the client wanted lump sum cover in your RWL.

Protection – If your client has given you a budget that does not fully cover all their protection requirements, the needs analysis should be completed on the basis of what you believe the needs to be regardless of whether you can recommend full cover for all of them.

TRAINING ON SYSTEMS

Where you requested training on any of the following systems, then this training will be provided within the next few weeks.

SolutionBuilder

Paymentshield – integrated with the Key.

Smartr Quote

Smartr Criteria

Smartr Fit

CI Expert

UnderwriteMe

Criteria Hub/Affordability Hub

Zoom (Teams/Skype)

WhatsApp

AND FINALLY

A reminder of those 5 Conduct Rules that all individuals are required to follow are:

Compliance News 3/21 Record Keeping

When checking cases, we are seeing an increasing number where it is not clear “why” we have gone to a particular lender, or “why” a client has chosen a particular protection solution

Mortgage advice and cheapest deal, or justification of lender.
 
We are all aware of our existing rules around the justification of lender, and the more recent FCA rules around the cheapest deal.  When we check a case and look at the Notes and the MRWL we should be able to understand why a specific lender has been recommended, but often where the reason is “because you didn’t meet the criteria of cheaper deals” we are not seeing any more information or personalisation.  Invariably, this statement alone could probably be accepted where there are small number of cheaper deals, however, we are often seeing 10, 15, 20 or even more lenders offering cheaper products.  Clearly, there is a reason why the more expensive lender, so far down the list, has been recommended, but the record is not always clear about this. 
 
To help remedy this potential problem, we are going to make some very minor amendments to the “reason for lender” section of the MRWL.  Where the lender recommended is not top of the sourcing list there will now be a prompt for the requirement to provide a brief explanation as to “why” you have used the lender or some details around “what” the client issue might be.
 
For instance, the paragraph below makes it much clearer about the recommended lender when you include the text in red.
 
“I have recommended ABC Bank from the providers that would lend to suit your requirements, because they offer the lowest cost product over the first two years of your mortgage, as the cost over this period was your preference. On sourcing for your mortgage six other lenders showed with a lower cost for the period, but from investigating further you do not meet their lending criteria because we needed to use your entitlement to net profit from your latest accounts to maximise your borrowing. This means that the cheaper lenders would not lend you the amount you needed to complete this transaction.” 
 
Protection chosen solution.
 
We are also seeking some further explanations on protection sales where the clients chosen solution differs from your recommendation.  A number of Advisers do this currently, but not all, and so we will now include a prompt in the PRWL to help remind you of this new requirement, which we feel will make your letters flow better.  Also, the requirement will help you or the client in the future if you need to refer back to your RWL, as it will remind if cost, or a client preference, was the reason for them not accepting your ideal recommendation.
 
When will these changes be effected?
 
You may adopt these new rules with immediate effect if you like, but the actual RWLs will not be updated with prompts until Friday 22nd January, from which point it will be mandatory to include these explanations.
 
And finally, please do ensure you take a moment to properly read through your client letters before sending them out, as we have seen some examples recently where the grammar has been very poor – thank you.
 
If you have any queries, please let Richard Hamley or your Sales Manager know.

Compliance News 2/21 – Q1 CPD

Knowledge Hub online CPD is now accepting entries towards your Quarter 1 CPD. 

Please look for compliance news 19/20 for instructions and your password if you need it. here is a vanilla version of the email – Compliance News 19/20.

In order to ensure the required rolling 15 hours per annum CPD is achieved, we are now having 4 cut-off points where we will reset the system back to 0:00.

As such, you need to complete 4h mortgage and 4h insurance CPD between now and March 31st which I am sure you will agree is more than achievable.

Personally, I’d simply be ensuring that I recorded a minimum of 1h:20 per month (for each) and never have to worry about insufficient CPD which as you know, is part of the FCA’s Fit & Proper assessment.

Compliance News 19/20 (New CPD Recording System)

As a reminder, there is a Regulatory requirement to record CPD.  As a minimum, each Adviser needs to record at least 15 hours of insurance CPD, plus a similar amount of mortgage CPD on top of this.  

You are only required to record CPD in those areas that you advise on, so if you are a Mortgage Adviser only, you don’t then need to record insurance CPD, and vice versa.  Similarly, if you are licensed to advise on the likes of Equity Release or Business Protection then your CPD hours will need to reflect some learning in these areas too, in order to retain these licenses.

New, minimum hours to be recorded.

The change is for Advisers to now record a minimum of 4 hours per quarter in each licence held (4 hours in mortgages and 4 hours in protection) and this will then give you a rolling accumulation of hours which always exceeds the minimum 15 hours prescribed by the FCA.

This new 4 hours per quarter ruling will apply from the 4th quarter of 2020 and it does include both mortgages and protection.

Is anything else changing?

Yes, the system on which we require you to record your CPD.  

Our new system will enable you to continue to record your CPD in a very easy manner, but you will now also be able to see your existing log of entries on the screen. Also, if you wished to do so, then this log can then be printed or downloaded to Excel.  

The information needed for each CPD entry is as follows:                

  1. Date of CPD (please enter the date of learning rather than the date of entry)
  2. How many minutes of mortgage and/or insurance CPD (please now only record this in minutes, so two hours will be input as 120)
  3. Activity undertaken (for example, attended a L&G CIC webinar)
  4. Key learning points (please detail here any learning from this activity) 

Having entered these details, you hit ‘submit’ and you can then see your CPD entry immediately logged. Your running total will be updated too.

How to access the new CPD system?

You access it from our Knowledge Hub website, https://knowledgehub.website/

Click in the search bar of this website and type your name. Then click on your name when it appears under the search bar. You will then be prompted to type in your password. If you do not see your name, simply add the letters CPD and search again.

Another way of accessing the site is via the link in the address bar. In my case, I would go to the knowledge hub and then add /cpd/markninnim and hit enter. If you like to collect shortcuts, this may work for you.

Your secure URL is – [Domain]

Your secure password is – [Password]

If you forget or wish to change your password for any reason, please message me.

If you have any issues with logging on, email me at mark.ninnim@financeplanning.co.uk

The new system is live now!

In the coming days, you will be sent an email detailing the CPD that you have recorded so far in 2020.  All future CPD entries can be recorded on the new system meaning that for this year only your CPD will be split between two systems.  We decided against holding this system back until 2021 because of the added benefits of this new system where you can easily see what CPD has been already recorded.

When you log in to this new system you will see that we have made one entry for you already, and this is the accumulation of CPD time already recorded on the old system in 2020. Please log in and have a look.

If you have any queries, please speak to your Sales Manager or Mark.

Compliance News 19/20 (New CPD Recording System)

This is just to let you know that if you have a protection licence then you should have completed your 15 hours of CPD for 2020, which should all be recorded on our CPD system.

At the end of today, the CPD system will be taken offline so that we can download your CPD entries which will then form part of your Certification of Competence to the FCA.  Therefore, if you still have some CPD to record then please ensure this is done by midnight tonight, Tuesday 5th January.  

From tomorrow you will not be able to access the system for a short while whilst we download the data and reset everyone’s hours back to zero.  After that, your Q1 2021 CPD can be recorded.

Please be aware that as per our Compliance News issued on 22nd October, if you have not recorded sufficient insurance CPD then this is a regulatory breach which will need to be recorded.  Furthermore, you will be required to attend some mandatory training over the coming couple of weeks to make up any shortfall in your hours.

Any queries, please let me know.

Compliance News 18/20 (Porting and ERCs)

Where a client has an existing mortgage and they wish to purchase a new property, we need to do a calculation to ascertain the best financial solution for the client.  These are our existing rules based on FCA requirements and nothing is changing.

Record Keeping.

We are seeing an increasing number of cases where the calculation to demonstrate whether (i) porting or (ii) paying ERCs and re-mortgaging is not being evidenced.  Where we check a case, we are invariably provided with your calculation to substantiate your advice.  However, for unchecked cases which don’t show the calculation, this poses a risk of us being unable to defend a potential complaint in the future.

We, therefore, expect the calculation showing the costs of each scenario on every case.  This should be typed in Notes, please.

New ‘Reason For Lender’ paragraphs.

To help with your RWL creation, we have added three further paragraph options to help you justify your advice.  You’ll note that one of these requires you to replay to the client the difference in costs (porting v re-mortgaging) where the re-mortgage option was cheaper for the client.

Porting with extra borrowing because Early Redemption Charges means it is the cheapest option

I have recommended an additional product from your current lender, Lender, to suit your requirements. This is because of the Early Repayment Charges associated with redeeming your current mortgage. This means that retaining your existing mortgage plus your new extra borrowing with Lender is the cheapest option for you when comparing costs to all other lenders with whom you met their lending criteria.

Porting with extra borrowing, because client prefers, despite re-mortgage being cheaper

Ordinarily, I would recommend you the lowest cost product over the first [INSERT number] years of your mortgage, however, your over-riding preference was for another product from your existing lender, Lender, because you did not wish to incur any financial penalties, known as Early Repayment Charges [DELETE or insert different reasoning]. Because of this, I have recommended that you proceed with an additional product from your current lender, Lender.  

As staying with your existing lender was not the least expensive mortgage to meet your needs, I’d like to reiterate that the cheapest option available to you would potentially save you £[INSERT saving] over the first [INSERT number] years of your mortgage, even taking into account the penalties for redeeming your existing mortgage.

Porting with same or lower borrowing because of ERCs

I have recommended you retain your existing mortgage with Lender to suit your requirements. This is because of the early repayment charges associated with redeeming this mortgage in full. Therefore retaining your existing mortgage is the cheapest option for you when comparing costs to all other lenders with whom you met their lending criteria.

If you have any queries, please speak to your Sales Manager.

Thank you.

Pete Burgess