Scenario:
A retirement later life lending advice firm engaged Square 4 to undertake some suitability assessments on several equity release advice files to support its ongoing compliance monitoring activity with independent third-party assurance. The assessment included reviewing file documentation and listening to relevant advice calls to determine whether the advice was suitable, provided good outcomes, and met regulatory standards, in line with FCA rules and guidance. The firm had been subject to the FCA’s thematic review of Later Life Lending, so also wanted assurance on the changes that had been implemented.
Key Activities:
Suitability Assessment
- Assessing the suitability and advice quality of two different file types:
- ‘Check the Checker’ files – those which had already been assessed by the firm’s 1LOD QA team.
- Theme-based assessments – those which had been selected because they displayed the characteristics of a particular risk theme the firm wanted additional assurance on e.g. vulnerable customers.
Ongoing governance and MI reporting
- We produced weekly management information and trend analysis of the results, reporting on both operational progress, and risk and issue insights.
- We discussed our findings, observations, progress, and budget tracking in weekly governance committees.
Final report
- At the end of the review, we provided a detailed insights report outlining our key findings, any associated risks and recommended remedial actions for the firm to take in order to improve advice quality moving forward.
Approach:
- Phase 1 – Initial Document Review: We requested copies of, and reviewed, key policies, processes, procedures, and adviser guides and tools. We reviewed current practices against regulatory expectations and industry best practice, discussing any early observations and questions with the Firm.
- Phase 2 – Suitability Assessment: Following the initial document review, we commenced running the suitability assessments. We had a dedicated specialist equity release team, who assumed responsibility for all aspects of the review. This included: file reviews, call listening, quality assurance, capacity planning, forecasting, the production of management information, stakeholder engagement and reporting. We had regular and open dialogue with the Firm to ensure that any issues were resolved in a timely manner. File samples were selected from the Firm’s new business registers using a risk-based approach. Following file selection, we undertook the suitability assessment of the client files provided. We used our Square 4 tried and tested suitability assessment template to undertake the reviews, which considered areas such as: documents and disclosure, quality of information in the fact-find, customer circumstances and objectives, income and expenditure, vulnerability, debt consolidation, risks and disadvantages, and the basis of the recommendations made as documented in the suitability report. We opined on the suitability of the advice based on the available information, and provided a set of findings and remedial actions, as required, for each file.
- Phase 3 – Debrief and Report: We provided weekly updates to the Firm, as well as a full debrief and report which was used internally to inform decision-making, action planning, and next steps. As part of the updates, we provided clear oversight of the file assessments with an effective dashboard which included weekly production details, quality scores, outcomes, trends, risks, and issues.
Results:
Square 4 delivered a comprehensive suitability assessment clearly outlining areas of attention for our client. The quality and value of our work resulted in the client wanting to engage Square 4 for quarterly reviews on an annual basis, to ensure their internal processes and controls remain for purpose and regulatory compliant. In addition, the client notified the FCA of our procured support and the actions that were being taken given our findings. Our flexible model and partnership approach provided the Firm with the expertise and assurance to keep them compliant while undertaking complex FCA-regulated activities.
