Financial Planning

Disputes lead to FPA file note guidance

FPA file note guidance

Disputes between advisers and clients have led the FPA to create new guidance about what should be recorded in a file note and new ways of capturing that information.

The Financial Planning Association (FPA) has released new guidance for its members to help them identify potential problems in a file note after finding they were a key issue in disputes brought before the Australian Financial Complaints Authority (AFCA).

FPA chief executive Dante De Gori said the association’s professional standards and conduct committee had identified a gap in the record-keeping associated with file notes when examining recent case determinations by AFCA.

“In reviewing AFCA reports and case law, detailed file notes were one of the biggest factors which helps in defending financial planners. Unfortunately, in a dispute, the file is going to be the enduring evidence of the financial advice a planner has provided,” De Gori said.

The FPA pointed out that while financial planners only account for 1.3 per cent of AFCA complaints, the key issues behind the complaints – which dealt with what advice was provided and what instructions were followed – were due to incomplete record-keeping.

It added good file notes have proved to be a key item of evidence in disputes and in a case examined by the FPA the content of the file note was considered to be more representative of the adviser-client discussion than the latter’s unsupported recollection of that discussion.

“Another case revealed that the file note created by a financial planner proved that their conduct was consistent with the appropriate professional standards and that the appropriate advice was given to the client,” the FPA stated.

AFCA chief ombudsmen David Locke said: “Documents created at the same time as the activity or advice in question are usually given more weight than later recollections of what was said or done. This means contemporaneous file notes of conversations and actions are solid gold when a dispute comes to us.”

The guidance also said file notes are no longer limited to being recorded on paper and provided ways for planners to create written, audio and video notes using software and apps available on desktop computers and mobile devices.

“File notes no longer need to be paper-based. There are new and more efficient ways for financial planners to build a proper audit trail through effective record-keeping,” De Gori said.

“This not only gives greater clarity around why decisions are made, but could be used when supporting evidence is needed.”

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