Last week, Verve and BareRock, hosted the second of our trilogy of joint webinars and this time the focus was on how your file checking process and PI can go hand in hand (or maybe, how to ensure they DO go hand in hand!) The session prompted significant discussion, and some clear actions for firms to embed.
Often there is an assumption that if you are file checking, and have a file checking process in place, that you are "compliant" and that your PII provider will be confident that you are a compliant business and offer you cover to reflect that. But what we have identified is that isn’t actually the case with most PII providers, and nor should it be. A process is good, but what is that process? How has it been adapted to your specific business and the risks you portray as a firm? And how does that ultimately give comfort to an insurer?
What we mean by this, is to question what the file checking process is actually checking. Is it a check for documents on file? Or is it a genuine suitability review that the advice being received by a client, is suitable based on their objectives? These are two very different areas and while a document gap can be easily rectified, a suitability issue is likely to point to more training and support needed for an adviser.
Even now, in 2025, one of the biggest weaknesses in files that we still see is the clear identification of a client’s objectives. We know that often an adviser will know ‘in their head’ what the client wants, but if it isn’t written down, it didn’t happen. This is supported by both FCA and FOS findings and ensuring that this is embedded in your file creation, and looked for in your file checking, will go a long way towards demonstrating suitable advice.
Going that extra mile into the detail of your file check and focusing on that suitability assessment, you may need to look at your suitability report. Are your templates too prescriptive? How long are they? FOS have commented on cases where reports are too long, even more so now in a Consumer Duty world as they question the consumer understanding element. Burying key information within a 50 page report isn’t going to help the consumer understand the relevant points of the recommendation, the risks, the suitability and the cost.
Never a term people want to hear as it often causes knee jerk thoughts of ‘redress’ and ‘complaints’, but this is also the point of a file check. Where remedial actions have been highlighted, what is your process? Do you ensure all remedial actions are corrected? And most importantly, on the basis the answer is (and should be) yes, ensuring that this is recorded. If your check highlights actions where the file is weak, or fundamentally incorrect, you must ensure this is amended. Should a FCA business review ever land in your inbox and they find a file has been reviewed, remedial actions highlighted, and no actions were taken, this is going to be detrimental to the regulators perception on how compliant your business is, and your attitude towards compliance overall.
Looking at the remedial actions, you should be asking the question of your file checking framework and how the business being checked is split between pre and post sale business. The consideration that pre-sale checking is a risk mitigation strategy for a business and that remedial actions are able to be addressed prior to reaching out to the client, needs to be considered as a benefit to the business.
The webinar highlighted the need for firms to review and reflect on their file checking process, and clearly signposting the benefits of a compliant process and the impact it could have on your Professional Indemnity Insurance.
If you missed out, and are a Verve member, you can watch it back (and get some CPD!) in our training library.
