{"settings":{"backgroundColor":null},"rows":[{"columns":[{"id":"col-0-0","width":100,"value":[{"type":"headline","component":"h1","content":"BareRock Briefing - File Reviews That Actually Add Value - A PI Perspective"},{"type":"text","content":"Welcome to The BareRock Briefing."},{"type":"text","content":"File reviews sit at an interesting intersection — compliance requirement on one side, genuine business tool on the other. Done well, they can reduce your PI exposure, surface business opportunities and strengthen client relationships, often all at once."},{"type":"text","content":"It's a topic that clearly resonates. We explored it recently in a webinar with The Financial Planning Club, and the engagement from advisers, compliance managers and paraplanners confirmed just how much appetite there is across the profession for practical, PI-focused guidance here."},{"type":"text","content":"So that's what this edition delivers."},{"type":"text","content":"In this briefing we're sharing practical guidance on how effective file reviews can simultaneously reduce your PI risk, identify business opportunities, and strengthen client relationships."},{"type":"list","heading":"In this briefing:","bullets":["Moving Beyond Tick-Box Exercises","The Value of External Perspective","The Three-Lens Review Method","Managing Remedial Actions Effectively","Pre and Post-Sale Checking Strategies","How We Can Support You"]},{"type":"headline","component":"h2","content":"Moving Beyond Tick-Box Exercises"},{"type":"text","content":"When a review focusses on tick boxes to confirm documents are present without genuinely engaging with the quality of advice provided this gives a false sense of security. The phrase ‘Chocolate Fireguard’ jumps to mind! This approach poses significant PI risks because it fails to identify the gaps that regulators and the Financial Ombudsman Service will scrutinise when complaints arise."},{"type":"text","content":"A meaningful file review requires you to move beyond checking whether documents exist. Instead, you must evaluate whether the documentation demonstrates suitable advice and would withstand challenge from an adjudicator reading the file with hindsight. This deeper level of review takes more time initially, but it protects your business by identifying issues before they become complaints."},{"type":"headline","component":"h2","content":"The Value of External Perspective"},{"type":"text","content":"Even the most diligent internal file review processes can suffer from organisational blind spots. When the same team reviews files created by colleagues they work alongside daily, it's easy to fall into an echo chamber where certain assumptions or approaches go unchallenged simply because “that's how we've always done it”. This is where independent compliance consultants acting as “critical friends” provide genuine value. An external reviewer brings fresh eyes that aren't influenced by your firm’s day-to-day operations and can identify issues that have become normalised within your organisation. They can challenge documentation that seems clear to you but may confuse clients or adjudicators, question assumptions embedded in your processes, and benchmark your standards against wider market practice. "},{"type":"text","content":"At BareRock, we recognise the PI risk mitigation value of external validation, which is why firms demonstrating regular independent file reviews benefit from enhanced Club scoring. These external relationships aren't about finding fault but about continuous improvement through objective assessment. The modest cost of periodic external reviews typically pays for itself many times over through earlier identification of systemic issues before they generate claims."},{"type":"text","content":"It's also worth considering the economics of internal peer review more carefully. When two advisers review each other's work, with the rigour it deserve, that is billable time being spent on compliance activity rather than serving clients. In many cases, the maths simply favours outsourcing: a specialist external case checker can often do the job more efficiently, more objectively, and at lower overall cost than the equivalent adviser time diverted from client-facing work. Before assuming that keeping case review in-house is the cheaper option, it's worth running the numbers honestly."},{"type":"text","content":"One final, honest observation: in our experience, the firms that invest most seriously in robust external file review tend to do so after a complaint or a regulatory intervention. It's a very human response, but it's a costly one. The firms that proactively seek external challenge, before something goes wrong, are the ones best placed to ensure it never does. If you're reading this and your current process relies primarily on internal checking with no external validation, the question worth asking is not “do we need to change?” but “what are we waiting for?”."},{"type":"headline","component":"h2","content":"The Three-Lens Review Method"},{"type":"text","content":"When reviewing client files, a preferred approach is to examine each case through three distinct perspectives: compliance, advice risk, and client value."},{"type":"text","content":"The Compliance Lens verifies that your file meets minimum regulatory standards. Check that suitability reports are complete, fact-finds are current, risk profiles are properly justified, and evidence of ongoing service is present. Confirm alignment between advice provided and your firm's investment proposition. Verify client segmentation to ensure service levels and charging match the agreed tier."},{"type":"text","content":"The Advice Risk Lens requires you to read your file as if you were the Financial Ombudsman Service adjudicator reviewing a complaint. Identify gaps between what you did and what you documented. Pay particular attention to “advice not taken” scenarios and decline-to-act decisions. Review whether risk profiling discussions are consistent with actual portfolio holdings and explain any apparent inconsistencies through specific client circumstances."},{"type":"text","content":"The Client Value Lens transforms reviews from defensive exercises into proactive business development. Look for out-of-date wills and estate planning, changed circumstances not reflected in planning, products approaching maturity, protection gaps as family circumstances evolve, or clients not maximising ISA allowances and pension contributions. These observations should generate follow-up actions that add value whilst strengthening your advice trail."},{"type":"headline","component":"h2","content":"Managing Remedial Actions Effectively"},{"type":"text","content":"Identifying issues through file reviews is only valuable if you act on your findings. Failure to address identified problems creates significant PI exposure because it demonstrates you knew about risks yet chose not to mitigate them."},{"type":"text","content":"When file reviews identify gaps, create a clear action plan specifying what needs to be done, who is responsible, and when completion is expected. Some issues may require client contact, particularly where advice may have been unsuitable or significant documentation gaps exist. "},{"type":"text","content":"If a file review flags a failing with recommended remedial action that remains unresolved, and that file later comes under regulatory scrutiny, you're exposed on two fronts; not only the original issue itself, but also a potential systems and controls breach for failing to act on known deficiencies."},{"type":"text","content":"Establish clear action tracking systems, assign responsibility to specific individuals, verify completion rather than simply accepting actions have been addressed, and document all changes made. This ensures accountability and minimises future risks."},{"type":"text","content":"Distinguish between systemic issues affecting multiple clients and one-off problems isolated to individual cases. Implement continuous process improvement where insights from reviews inform enhanced procedures and training. Ensure senior management oversight and address unresolved issues promptly with documented justification if completion as planned isn't possible. "},{"type":"text","content":"One thing which always looks concerning to me is repeat failing of the same issue coming up again and again. There's an old saying that the definition of madness is doing the same thing repeatedly while expecting different results; the real value of file review feedback lies not just in fixing individual cases, but in recognising recurring themes and adapting your processes to avoid making the same mistakes twice."},{"type":"headline","component":"h2","content":"Pre and Post-Sale Checking Strategies"},{"type":"text","content":"Pre-Sale Checking is recommended for new advisers still developing their skills, complex cases regardless of adviser experience, high-risk business lines where your firm has limited track record and/or where complaint redress risk would be high, and when introducing new products or services. This approach prevents unsuitable advice from proceeding and provides valuable coaching opportunities."},{"type":"text","content":"Crucially, it also creates a feedback loop - patterns identified at the pre-sale stage can inform training needs and process improvements across the firm, helping you learn from near-misses rather than waiting until problems surface in post-sale reviews or, worse still, in complaints or regulatory scrutiny."},{"type":"text","content":"Post-Sale Checking is suitable for established advisers with proven track records, standard transactions with lower risk profiles, and annual reviews involving updates to existing arrangements rather than significant new recommendations. "},{"type":"text","content":"Even the most experienced advisers benefit from having a critical friend. It's easy to assume that years of experience equate to immunity from error, but the reality is that markets evolve, regulations shift, and new risks emerge constantly. Without periodic external challenge, there's a danger of settling into a passive rhythm where established habits go unquestioned and subtle changes in best practice pass unnoticed."},{"type":"text","content":"A critical friend isn't there to catch you out; they're there to offer a fresh perspective, to ask the questions you've stopped asking yourself - and to make sure that experience remains a strength rather than a source of complacency. In a regulatory environment that never stands still, the advisers who stay sharpest are those who actively seek out that constructive challenge rather than waiting for problems to find them."},{"type":"text","content":"Strategic Considerations: Adopt a risk-based approach allocating checking resources where they're most needed. Consider the commercial realities of your business model. In our experience successful firms operate a hybrid model where specific triggers (adviser experience, case complexity, transaction value, or product type) determine whether pre or post-sale checking applies."},{"type":"headline","component":"h2","content":"Good Companies in Good Companies ®"},{"type":"text","content":"We find that it is common practice for our top tier Club members to use a combination of inhouse case checking alongside external compliance consultant sample checking. They typically utilise both pre and post-sale checking and it isn't uncommon for firms to check nearly 100% of what we refer to as New ‘New’ Business (e.g. brand new product recommendations excluding additional pension contributions, Pension switches, mortgage product transfers and top-ups such as using annual ISA allowances etc). This is due to a lot of firms not being heavily transactional and largely looking after an established, stable customer base so it is easy for all New ‘New’ Business to be checked."},{"type":"headline","component":"h2","content":"How We Can Support You"},{"type":"text","content":"At BareRock, we understand that robust file review processes are fundamental to managing your PI risk. Our Club Member proposition recognises and rewards firms demonstrating strong file review and quality assurance processes."},{"type":"text","content":"We strongly endorse the use of specialist compliance consultants who can provide practical support with establishing effective file review frameworks. When issues arise, we work with you to understand what happened and support appropriate remediation via lessons learnt when appropriate."},{"type":"text","content":"John Netting is COO at PII provider BareRock."}],"padding":{"top":0,"right":0,"bottom":0,"left":0}}],"padding":{"top":0,"right":0,"bottom":0,"left":0}}]}