The full weight of the financial advice look-back regime is being made clear to financial advisers, with at least one large licensee telling advisers that it will also be looking at a further two years beyond 2019 to “provide confidence” that ongoing services have been provided to clients.
IOOF has told advisers working under its licenses that with the scope period of the Lookback Project ending in September 2018, and the introduction of the new Fixed Term Client Service Agreements from early 2020, “there is a window of ~2 years where further testing is required to provide confidence that ongoing services were provided to clients in this top-up period”.
It said the period in question spanned from 2 October, 2017, to 31 March, 2020, noting that there was an overlap between the end of the Lookback period and the beginning of the ‘top-up’ period “to ensure a full period is reviewed as periods beginning after 1 October, 2017, will not have been covered by the Lookback.”
“Testing will be required for practices where issues were identified in the most recent period tested for the Lookback Project (July 2008 – September 2018),” it said.
It said that the key activities with respect to the ‘top-up’ testing would be undertaken by major consultancy PWC and would involve:
- Reviewing the names and authorisation dates of the practice and all advisers that operated under the practice between 2 October 2017 to 31 March 2020 (whether current or exited);
- Understanding which clients paid OSF to an adviser tagged to the practice between 2 October 2017 to 31 March 2020;
- Selecting an appropriate sample for testing which may involve segmenting the client book (for example based on the annual fee value or the servicing adviser);
- Testing the sample for each client segment, including identifying and retaining evidence of the service obligation for the specific client being tested; and
- Evidence that this service was delivered for the annual period being tested, e.g. if the service obligation was for the offer of an annual review, we will be testing that an offer was made to conduct the annual review for that period.
The advisers were told that where documentation was readily available on Xplan there would be no contact required.
“Only in instances where questions arise as a result of testing, or where relevant documentation is not held in XPLAN will PwC contact you,” it said. “Further where additional documents are required, PwC will agree with you on an appropriate way to access the records and will ensure that realistic and achievable timeframes are agreed to finalise the review.”